Tag: Private Prisons

The GEO Group (GEO) – A Look into the Fourth Quarter

Posted on by slightbourne@noblecapitalmarkets.com


Friday, February 28, 2025

The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

4Q Results. Revenues for the fourth quarter slightly declined to $607.7 million from $608.3 million in the prior year. Adjusted EBITDA totaled $108.0 million, down from $129.0 million last year. Net income was $15.5 million, or $0.11 per diluted share, down from $25.2 million, or $0.17 per share, last year. Adjusted EPS was $0.13 per diluted share versus $0.29 per share the prior year. Earnings and adjusted EBITDA were below expectations, primarily due to higher general and administrative expenses incurred during the fourth quarter of 2024.

New ICE Contract. Also announced was the award of a 15-year, fixed-price contract by ICE to provide support services for the establishment of a federal immigration processing center at the company-owned, 1,000 bed Delaney Hall facility in Newark, NJ. The contract is expected to generate in excess of $60 million in its first full year of operations, with margins consistent with GEO’s Secure Services facilities. The idle facility is expected to be activated in 2Q 2025, with revenues and earnings from the new contract normalizing during the second half of 2025.


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Private Prison Stocks Surge Following Trump’s Immigration Appointment

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Shares of Geo Group and CoreCivic saw significant increases (over 7% and 8%, respectively) after the appointment of Tom Homan as “border czar,”
– Homan’s appointment aligns with Trump’s strong stance on deportation and border security, so there is an anticipated increase in federal contracts for private detention companies
– Renewed focus on immigration enforcement marks a a significant departure from the current adminstration’s stance

Private prison stocks surged Monday after President-elect Donald Trump appointed Tom Homan as “border czar,” sparking market optimism about a renewed focus on immigration enforcement. Shares of Geo Group and CoreCivic, both major players in the private detention sector, jumped over 7% and 8%, respectively, in response to the announcement. Homan, previously the head of Immigration and Customs Enforcement (ICE) under Trump’s first term, is known for his firm stance on deportation and border security. His appointment signals a potential increase in federal contracting for companies that provide detention services, specifically for ICE operations.

Trump’s announcement on Truth Social stated that Homan will be in charge of all deportation efforts, encompassing both land and maritime borders, with an emphasis on accelerating deportations. During a conservative conference in July, Homan declared he would lead the “biggest deportation force” in U.S. history if Trump was re-elected. This strong stance aligns with Trump’s previous immigration policies, which saw heightened demand for detention facilities, and is expected to bolster the private prison industry, including companies like Geo Group and CoreCivic, which have contracts with ICE and the U.S. Marshals Service.

The renewed focus on immigration enforcement under Trump is a significant shift from the current administration’s approach, which has limited federal use of private detention centers. This shift presents a potential growth opportunity for private prison companies, which struggled as President Biden worked to reduce private prison contracts. With Homan’s appointment, investors anticipate a resurgence of federal reliance on private detention services to meet increased demand for housing immigrant detainees.

Analysts have responded positively to this development, citing that Trump’s administration will likely “embrace” companies like Geo Group and CoreCivic. Isaac Boltansky, an analyst with BTIG, noted that private prison companies are positioned for growth under an immigration-focused administration, specifically due to likely contracting needs with the U.S. Marshals Service and ICE. Analysts expect Homan’s policies to generate consistent demand for private facilities, which could lead to stronger financial performance and increased market value for these companies.

Trump’s firm stance on deportation and his choice of Homan as border czar have energized investors. The expected rise in federal contracts signals a favorable outlook for private prison stocks. With immigration reform likely to be a focal point in Trump’s administration, CoreCivic and Geo Group could see sustained growth, especially as they support the expanded need for detention services. The private prison sector, long entangled with federal enforcement policies, now faces a potential resurgence as market trends align with anticipated shifts in government policy.