GEO Group Stock Analysis


Real Estate Investment Trusts REITs $USRT have been doing pretty well in recent years except for private prisons REITs. Private Prisons are controversial and the market $SPX500 currently doesn't like them. There are two main private prison companies, GEO Group $GEO and CoreCivic $CXW .


𝙏𝙝𝙚𝙧𝙚 𝙞𝙨 𝙖 𝙗𝙞𝙜 𝙥𝙧𝙤𝙗𝙡𝙚𝙢 𝙤𝙛 𝙤𝙫𝙚𝙧-𝙞𝙣𝙘𝙖𝙧𝙘𝙚𝙧𝙖𝙩𝙞𝙤𝙣 𝙞𝙣 𝙩𝙝𝙚 𝙐𝙎 𝙖𝙣𝙙 𝙢𝙖𝙣𝙮 𝙥𝙚𝙤𝙥𝙡𝙚 𝙗𝙡𝙖𝙢𝙚 𝙥𝙧𝙞𝙫𝙖𝙩𝙚 𝙥𝙧𝙞𝙨𝙤𝙣𝙨. They have a role to play, but they are not the only ones at fault. The government is to be blamed too. The Biden Administration is not a fan of private prisons and earlier this year, President Joe Biden issued an executive order banning the Department of Justice (DOJ) from renewing their contracts with private prisons. GEO Group will face other issues in refinancing their loans as many banks such as JPMorgan Chase $JPM no longer loan to private prisons.


This directly affects the business of GEO as 28% of their revenues comes directly from the DOJ through the Bureau of Prisons (BOP) and the US Marshalls. Prisons, however, are always going to be here.


However, now, the largest revenue segment is not the DOJ but ICE (Immigration and Customs Enforcement) as the Border Crisis intensifies. I believe that in the coming years, the revenues and profits are going to be stable.


GEO Group is undervalued today as the market overreacted but I won't say that this is a stock for the long-term. Rather, 𝙞𝙩 𝙞𝙨 𝙖 𝙘𝙞𝙜𝙖𝙧 𝙗𝙪𝙩𝙩 𝙨𝙩𝙤𝙘𝙠. The company has a moat with good fundamentals.

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