Corrections Corporation of AmericaNYSE
Lock Up A 12% Yield In Corrections Corporation Of America After Market Overreaction
Paul Goncalves, CFA • 12 Comments
Paul Goncalves, CFA • 12 Comments
This Prison REIT Has 30% Upside And 6.6% Yield
Dane Bowler • 61 Comments
Dane Bowler • 61 Comments
Tue, Oct. 18, 10:08 AM
- Immigration and Customs Enforcement (ICE) earlier this summer requested CCA (CXW +5.9%) either cut back services at the company's 2.4K-bed South Texas Facility, or lower the price. Last night, CCA announced a reduced monthly payment, but an extension of the contract through Sept. 2021.
- This particular property accounted for $142M of CCA's $991M in revenue in H1.
- While this means a cut in full-year normalized FFO guidance to $2.57-$2.60, 2017 guidance of $2.11-$2.21 is well above Street consensus of $1.99.
Mon, Oct. 17, 5:36 PM
Wed, Oct. 12, 1:05 PM
Wed, Oct. 12, 11:58 AM
- Corrections Corp. (CXW +8.9%) surges after earning an upgrade to Buy from Neutral with a $20 price target at SunTrust, which predicts a round of positive headlines is coming after recent months of negative news.
- Shares are worth buying at current levels even as the firm assumes CXW's immigration and customs enforcement family processing contract is cut in half to just 10% of the company’s total EBITDA, its Bureau of Prisons business is phased out, and its California out-of-state business is gone by 2017.
- Sentiment around CXW has become too negative, creating an attractive risk/reward balance, SunTrust says.
Fri, Sep. 30, 1:04 PM
- It's a decent day for GEO Group (GEO +3.3%) and Corrections Corp. (CXW +1.4%) after GEO announced a contact extension with the BOP for its D. Ray James Correctional Facility. The renewal comes just weeks after a DOJ directive for the BOP to cancel private prison contracts as they came up for renewal.
- The development isn't changing analyst Ryan Meliker's perception of the sector's headwinds, but the move could drive some uncertainty surrounding the DOJ's decision - a positive for the stocks given that they're already priced for termination of all BOP contracts.
- Meliker prefers GEO Group to CCA thanks to GEO's lower risk to family detention, safer dividend yield, and diversified business model.
Tue, Sep. 27, 4:28 PM
- The company expects to cut about 12% of its workforce (50-55 full-time positions) as part of its cost-reduction plan. Alongside, CCA (NYSE:CXW) anticipates taking a $4M charge in Q3.
- The staff cuts along with other initiatives are expected to save about $9M in 2017.
- In support of the plan, CEO Damon Hininger will voluntarily forfeit restricted stock awarded to him earlier this year ($2M fair value), and he has requested the board award him no equity-based compensation next year.
Tue, Sep. 27, 1:02 PM
Fri, Sep. 16, 5:08 PM
- Private prison operator Geo Group (NYSE:GEO) gained more than 5% today following a New York Times report that a criminal justice overhaul bill was effectively dead in the U.S. Senate.
- According to the report, the bill was hurt by division among Republicans about cutting required sentences and the difficult timing of the legislation in a presidential election year.
- Shares of both Geo and Corrections Corp. of America (NYSE:CXW) plunged last month following a Justice Department announcement that some contracts with private prisons would be phased out; CXW fell 0.4% in today's trade.
Mon, Aug. 29, 8:08 AM
- The company notes that since the DOJ decision to curb reliance on privately-operated prisons, a number of customers have publicly stated their support for private-sector correctional space and services.
- "Our correctional and detention facilities and services are subject to hundreds of government audits each year to help ensure compliance with our contracts covering all aspects of our operations," says CXW CEO Damon Hininger. "We look forward to validating the value proposition we provide."
Wed, Aug. 24, 5:58 PM
- Private prisons aren't going anywhere but neither are the risks to Corrections Corp. of America (NYSE:CXW) and GEO Group (NYSE:GEO), Canaccord analysts say, after shares of each plunged 30% in the five trading days since the U.S. Department of Justice said last week that it would begin to cut back on its use of private prisons.
- While Canaccord sees minimal near-term risk to the non-Bureau of Prisons contracts of both companies, making the stocks "very cheap," it maintains concerns surrounding BoP contract cancellation headlines, a likely CXW dividend cut, and risk of a CVX covenant breach that also could weigh on GEO in the near-term.
- The firm reiterates its Hold rating on CXW and Buy rating on GEO, but cuts its CXW price target to $21 from $30 and its GEO target to $28 from $38.
Fri, Aug. 19, 1:00 PM
Fri, Aug. 19, 12:51 PM
Fri, Aug. 19, 9:14 AM
Fri, Aug. 19, 7:28 AM
- Noting the Bureau of Prison's inmate population has already been falling over the past three years, CCA (NYSE:CXW) says it's nevertheless disappointed in the government's decision, and believes the company's value proposition remains strong.
- Contracts with the BOP remain in place for the time being, and represent about $131.2M in annual revenue to CCA, at operating margins consistent with the rest of the portfolio.
- The company will hold a conference call to discuss at 12 ET.
- CXW +9.6% premarket to $19.25; GEO Group +7.1%
Thu, Aug. 18, 5:35 PM
Thu, Aug. 18, 4:36 PM
- "It’s important to note that today’s announcement relates only to Bureau of Prisons correctional facilities, which make up 7% of our business," says Correction Corp. of America (NYSE:CXW) in a note sent to StreetInsider.
- The IG report used to buttress the DOJ's decision to end private prisons for the BOP has "significant flaws," says the company. "The findings simply don’t match up to the numerous independent studies that show our facilities to be equal or better with regard to safety and quality, or the excellent feedback we get from our partners at all levels of government."
- After falling 46.9% in the regular session, the stock's higher by 23% in busy after hours action. GEO Group up 0.7% after hours following a 39.6% regular session decline.
- Previously: Prison stocks defended at Canaccord (Aug. 18)
- Previously: DOJ to end use of private prisons - Corrections Corp, GEO Group crumble (Aug. 18)