Geo Group (GEO) AI Stock Analysis

2,005 Followers

Top Page

Geo Group

(NYSE:GEO)

63Neutral

Geo Group's overall score reflects a mix of potential and risk. Financial performance shows operational efficiency but high leverage concerns. Technical analysis indicates positive momentum, yet valuation suggests overvaluation risks. The earnings call outlines promising growth opportunities, though with execution uncertainties.

Geo Group (GEO) vs. S&P 500 (SPY)

Market Cap

$4.24B

Dividend YieldN/A

Average Volume (3M)3.04M

Price to Earnings (P/E)155.7

Beta (1Y)1.48

Revenue Growth0.44%

EPS Growth-71.78%

CountryUS

Employees16,500

SectorIndustrials

Sector Strength66

IndustrySecurity & Protection Services

Share Statistics

EPS (TTM)0.19

Shares Outstanding142,836,400

10 Day Avg. Volume3,188,981

30 Day Avg. Volume3,044,037

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.64

Price to Cash Flow (P/CF)53.70

P/FCF Ratio39.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$44.80

Price Target Upside50.89% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Geo Group Business Overview & Revenue Model

Company DescriptionThe GEO Group, Inc. engages in the ownership, leasing, and management of secure facilities, reentry facilities, and processing centers in the United States, Australia, and South Africa. It operates through four segments: U.S. Secure Services, Electronic Monitoring and Supervision Services, Reentry Services, and International Services. The company provides counseling, education, and treatment for alcohol and drug abuse problems at various facilities; and compliance technologies for monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers, and pretrial defendants. It also offers secure facility management services, including security, administrative, rehabilitation, education, and food services at secure services facilities; reentry services comprising supervision of individuals in community-based programs and reentry centers, and provision of temporary housing, programming, employment assistance, and other services; and supervision and reporting services that improves the participation of non-detained aliens in the immigration court system. In addition, the company provides secure transportation services; and rehabilitation services, such as evidence-based, including cognitive behavioral treatment and post-release services, as well as academic and vocational classes in life skills and treatment programs under the GEO Continuum of Care platform; and develops new facilities based on contract, as well as designs, constructs, and finances the facilities. The GEO Group, Inc. was founded in 1984 and is headquartered in Boca Raton, Florida.

How the Company Makes MoneyThe GEO Group primarily generates revenue through government contracts for the management and operation of correctional and detention facilities. These contracts are typically long-term agreements with federal, state, and local government agencies. The company also earns revenue from the provision of electronic monitoring and community-based rehabilitation services. Key revenue streams include facility management fees, per diem rates for housed individuals, and fees for monitoring and community supervision services. Significant partnerships with government entities and a focus on cost-efficient facility operations contribute to GEO Group's earnings. Additionally, the company's ability to secure new contracts and renew existing agreements is crucial to its financial performance.

Geo Group Financial Statement Overview

Summary

Geo Group's financial health presents a mixed picture. Strengths in operational efficiency are offset by concerns in revenue growth and leverage. The income and cash flow statements indicate potential operational resilience, while the balance sheet shows high leverage risk.

Income Statement

Neutral

Geo Group has faced fluctuating revenue over recent years, with a notable revenue decrease in the latest annual period. Gross and net profit margins have shown inconsistency, though EBIT and EBITDA margins remained relatively steady. The recent decline in revenue and profits suggests challenges in maintaining growth momentum.

Balance Sheet

Neutral

The balance sheet reflects a high debt-to-equity ratio, indicating significant leverage, which could pose financial risk. Stockholders' equity has been volatile, and the equity ratio shows a reliance on debt. Overall, financial stability is a concern due to high leverage.

Cash Flow

Neutral

Operating cash flow has been relatively stable, with some fluctuations. However, the free cash flow has decreased recently. The company has maintained positive operating cash flows, but free cash flow trends highlight potential liquidity challenges.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.42B	2.41B	2.38B	2.26B	2.35B
	Gross Profit
2.42B	668.94M	713.00M	627.57M	571.77M
	EBIT
278.75M	352.39M	383.10M	288.08M	222.57M
	EBITDA
355.44M	482.12M	516.87M	423.26M	385.23M
	Net Income Common Stockholders
70.00K	107.33M	171.81M	77.42M	113.03M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
76.90M	93.97M	95.07M	506.49M	283.52M
	Total Assets
3.63B	3.70B	3.76B	4.54B	4.46B
	Total Debt
1.81B	1.89B	2.08B	3.06B	3.05B
	Net Debt
1.73B	1.79B	1.98B	2.56B	2.76B
	Total Liabilities
2.30B	2.41B	2.60B	3.56B	3.55B
	Stockholders Equity
1.33B	1.29B	1.17B	975.02M	912.08M
Cash Flow		Free Cash Flow
163.54M	211.93M	206.39M	213.24M	332.93M
	Operating Cash Flow
242.24M	284.93M	296.41M	282.63M	441.73M
	Investing Cash Flow
-101.72M	-60.57M	2.96M	-53.74M	-104.17M
	Financing Cash Flow
-168.89M	-208.08M	-699.10M	11.26M	-96.74M

Geo Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price29.69

Price Trends

50DMA

27.42

Positive

100DMA

28.48

Positive

200DMA

21.95

Positive

Market Momentum

MACD

0.46

Negative

RSI

55.75

Neutral

STOCH

83.33

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GEO, the sentiment is Positive. The current price of 29.69 is above the 20-day moving average (MA) of 28.88, above the 50-day MA of 27.42, and above the 200-day MA of 21.95, indicating a bullish trend. The MACD of 0.46 indicates Negative momentum. The RSI at 55.75 is Neutral, neither overbought nor oversold. The STOCH value of 83.33 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GEO.

Geo Group Risk Analysis

Geo Group disclosed 59 risk factors in its most recent earnings report. Geo Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Geo Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADT	78 Outperform	$6.67B	15.15	14.41%	2.79%	-13.19%	10.03%
BCO	71 Outperform	$3.78B	23.80	55.57%	1.11%	2.82%	95.64%
REZI	70 Outperform	$2.25B	22.33	3.83%	―	8.31%	-49.90%
NSSC	68 Neutral	$789.55M	16.56	29.13%	1.61%	5.14%	12.03%
ARLO	68 Neutral	$938.33M	―	-29.88%	―	4.01%	-27.92%
GEO	63 Neutral	$4.24B	155.69	2.08%	―	0.44%	-71.78%
Sector *	63 Neutral	$4.29B	11.05	5.73%	232.30%	4.75%	-5.69%

* Industrials Sector Average

Performance Comparison

GEO

Geo Group

29.69

15.12

103.77%

BCO

Brink's Company

87.54

1.34

1.55%

NSSC

Napco Security Technologies

21.69

-17.79

-45.06%

ADT

Adt

7.87

1.86

30.95%

ARLO

Arlo Technologies

9.21

-1.25

-11.95%

REZI

Resideo Technologies

15.77

-3.50

-18.16%

Geo Group Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: 15.17% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlights significant revenue potential from new and existing contracts and successful debt reduction strategies. However, increased overhead costs, a decline in electronic monitoring revenues, and uncertain timing of contract awards present notable challenges.

Highlights

Record-Breaking Revenue Potential

GEO Group expects the utilization of 17,000 additional beds to generate between $500 million and $600 million in incremental annualized revenues with margins consistent with their secure services facilities.

Long-Term Contract with ICE

Awarded a 15-year fixed-price contract by ICE for the Delaney Hall facility in Newark, New Jersey, expected to generate over $60 million in annualized revenues with a 15-year potential value of approximately $1 billion.

Debt Reduction Progress

The company plans to reduce net debt by $150 million to $175 million in 2025, aiming for a total net debt of approximately $1.55 billion by year-end.

Potential for Increased Monitoring Revenue

Returning to prior ISAP contract utilization levels could generate an incremental $250 million in revenues, with potential for more if participant counts exceed previous highs.

Lowlights

Increased Overhead and Lower Earnings

Fourth-quarter earnings and adjusted EBITDA were below expectations due to higher overhead expenses related to reorganization and professional fees.

Decline in Electronic Monitoring Revenues

Revenue from the electronic monitoring and supervision services segment declined by approximately 10% compared to the previous year's fourth quarter.

Uncertain Timing for New Contracts

Although significant opportunities are anticipated, the timing of new contract awards and facility activations remains uncertain, with significant upside expected only in the latter half of 2025.

Company Guidance

During The GEO Group's Fourth Quarter 2024 Earnings Conference Call, guidance for 2025 was outlined with a focus on significant growth opportunities. The company anticipates investing $38 million to renovate existing facilities, $16 million to increase GPS tracking device production, and $7 million to expand their secure transportation fleet. These investments aim to provide approximately 17,000 additional detention beds, potentially increasing ICE-related service capacity from 15,000 to 32,000 beds. This expansion could generate between $500 million and $600 million in incremental annualized revenues. Additionally, a 15-year contract for the Delaney Hall facility is expected to yield over $60 million annually. Overall, GEO Group forecasts potential upside of $800 million to $1 billion in incremental annualized revenues, with $250 million to $300 million in additional adjusted EBITDA. These projections align with ongoing discussions to activate idle facilities and expand electronic monitoring services under the ISAP program.

Geo Group Corporate Events

Business Operations and StrategyFinancial Disclosures

Geo Group Highlights Strategic Focus at Investor Day

Positive

Mar 20, 2025

On March 20, 2025, The GEO Group, Inc. hosted an Investor Day event, highlighting its strategic focus on reducing net debt, exploring options to return capital to shareholders, and investing in expanded service capabilities. The company anticipates unprecedented growth in 2025, driven by opportunities in detention capacity, secure transportation, and electronic monitoring services, which could significantly impact its financial results and stakeholder interests.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.