NEW YORK (TheStreet) -- Shares of Corrections Corp. of America (CXW) - Get Report were increasing in after-hours trading on Tuesday after the company announced a plan to restructure operations and reduce costs.
The prison operator will eliminate 12% of its corporate workforce at its headquarters in Nashville, or 50 to 55 full-time positions, according to a company statement.
Corrections Corp. said it expects to report a $4 million one-time charge in the third quarter related to the restructuring.
The plan is projected to save Corrections Corp. around $9 million in 2017. A substantial portion of the savings will begin in the 2016 fourth quarter.
CEO Damon Hininger will also forfeit his restricted stock unit awards for 2016 and 2017. His 2016 equity payment was worth about $2 million.
In August, the Justice Department said it plans to "substantially reduce" its contracts with private prison operators like Corrections Corp. and eventually end their use altogether.
Corrections Corp. stock closed down 7.57% to $14.78 on Tuesday.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C.
The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and deteriorating net income.
You can view the full analysis from the report here: CXW