PayPal (NASDAQ:PYPL) and Green Dot (NYSE:GDOT) Financial Analysis

PayPal (NASDAQ:PYPL) and Green Dot (NYSE:GDOT) are both business services companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Institutional & Insider Ownership

68.3% of PayPal shares are owned by institutional investors. Comparatively, 92.6% of Green Dot shares are owned by institutional investors. 0.1% of PayPal shares are owned by company insiders. Comparatively, 1.4% of Green Dot shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares PayPal and Green Dot’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PayPal	14.49%	25.35%	6.30%
Green Dot	-1.24%	9.93%	1.66%

Volatility & Risk

PayPal has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Green Dot has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for PayPal and Green Dot, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	2	15	17	0	2.44
Green Dot	2	1	2	2	2.57

PayPal currently has a consensus target price of $84.50, suggesting a potential upside of 13.26%. Green Dot has a consensus target price of $13.00, suggesting a potential upside of 4.64%. Given PayPal’s higher possible upside, equities analysts clearly believe PayPal is more favorable than Green Dot.

Earnings and Valuation

This table compares PayPal and Green Dot”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$31.80 billion	2.24	$4.15 billion	$4.68	15.94
Green Dot	$1.72 billion	0.40	-$26.70 million	($0.44)	-28.23

PayPal has higher revenue and earnings than Green Dot. Green Dot is trading at a lower price-to-earnings ratio than PayPal, indicating that it is currently the more affordable of the two stocks.

Summary

PayPal beats Green Dot on 11 of the 15 factors compared between the two stocks.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.

About Green Dot

Green Dot Corporation, a financial technology and registered bank holding company, provides various financial services to consumers and businesses in the United States. It operates through three segments: Consumer Services, Business to Business Services, and Money Movement Services. The company provides deposit account programs, including consumer and small business checking account products, network-branded reloadable prepaid debit cards and gift cards, and secured credit programs. It offers money processing services, such as cash transfer services that enable consumers to deposit or pick up cash and pay bills with cash at the point-of-sale at any participating retailer; and simply paid disbursement services, which enable wages and authorized funds disbursement to its deposit account programs and accounts issued by any third-party bank or program manager. In addition, the company offers tax processing services comprising tax refund transfers, which provide the processing technology to facilitate receipt of a taxpayers' refund proceeds; small business lending to independent tax preparation providers that seek small advances; and fast cash advance, a loan that enables tax refund recipients. Green Dot Corporation was incorporated in 1999 and is headquartered in Austin, Texas.