With the recent release of the third quarter results, NetSpend Holdings (NASDAQ: NTSP) once again has proven to be the ideal value stock. For the last three quarters, NTSP has continued with its aggressive growth even surpassing the expectations of many analysts. NTSP in more than one way has over the last three quarters proven to offer more value to its investors this fiscal year. The upward trend is expected to continue all through next fiscal year. Why do I say so?
Impressive fiscal Q3 2012 results
This is one of the reasons as to why this stock is expected to remain bullish among its competitors like Green Dot (NASDAQ: GDOT). A look into the recently released results for the third quarter reveals an increase of 25% in EPS. In the Q3 report presented by Dan Henry, CEO of NetSpend, the company reported an impressive 14% increase in revenue to approximately $84.9million compared to the same period in 2011 where it recorded an equally impressive $74.3 million.
This increase in revenue is a strong indication that NetSpend is continuing to cement its already firm position in the provision of general purpose reloadable prepaid debit cards plus other related financial services. It goes without saying that the demand for NetSpend shares will almost certainly increase in leap and bounds come next year. The increase in revenues will be one of the underlying factors in determining the direction of this stock. From where it stands, judging by the recent results, previous results (Q1 and Q2 results), and the trend exhibited since May this year, the company is on the right track. In fact, an increase in direct deposit accounts during the last three months has been seen to have substantially driven the revenue and earnings results.
During the third quarter, the company oversaw some major deals like the Walgreens (NYSE: WAG) deal which has made it possible for the sale of PayPal prepaid cards in Walgreens locations thus leading to an increased customer base. In addition, there is the Intuits (NASDAQ: INTU) deal in which NetSpend gets to be the exclusive distribution manager and processor of the huge GPR and card programs. Through this deal, NetSpend will be able to offer their prepaid cards to the current Intuit’s 24million customers who employ the use of TurboTax software online. This also extends to the approximately 1 million small business owners using QuickBooks for payroll services.
In his statement, CEO Henry reported that NetSpend expects to have a full year reports for the current fiscal year be between $348 and $352 million. Adjusted EBITDA is now expected or rather anticipated to fall to around $95-97 million and the net income per diluted share between $0.56 and $0.58.
Looking at the aforementioned factors and its strong performance in the last 3 Qs, NetSpend passes as a winning stock. Similarly and more importantly, the stock is currently trading way below its potential and there is room for improvement. It is for this reason that many investors would be looking out for this stock.