Geo Group Inc. Stock Upgraded (GEO)

NEW YORK ( TheStreet) -- Geo Group (NYSE: GEO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • GEO's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $24.79 million or 9.69% when compared to the same quarter last year. In addition, GEO GROUP INC has also modestly surpassed the industry average cash flow growth rate of 2.86%.
  • GEO GROUP INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GEO GROUP INC increased its bottom line by earning $1.23 versus $1.14 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.23).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Services & Supplies industry and the overall market, GEO GROUP INC's return on equity is below that of both the industry average and the S&P 500.
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The GEO Group, Inc. provides government-outsourced services specializing in the management of correctional, detention, mental health, residential treatment, and re-entry facilities in the United States, Australia, South Africa, the United Kingdom, and Canada. The company has a P/E ratio of 15.5, above the average diversified services industry P/E ratio of 13 and below the S&P 500 P/E ratio of 17.7. Geo Group has a market cap of $1.06 billion and is part of the services sector and diversified services industry. Shares are up 13.7% year to date as of the close of trading on Thursday.

You can view the full Geo Group Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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