Chek the Channels
Tuesday, April 7, 2020
Withdraws Guidance. How Safe is the Dividend?
CoreCivic Inc through its subsidiaries operates as a diversified Corrections Corporation of America, or CCA is a real estate investment trust involved in the ownership and operation of private prisons. CCA mainly controls medium-security correctional and detention facilities located throughout the U.S. The company derives the vast majority of its income in the form of management revenue from medium-term contracts. CCA is compensated on a per diem rate based on the bed capacity and range of services offered at its facilities. Total revenue for the company is split fairly evenly between contracts with federal agencies, such as the Federal Bureau of Prisons and US Marshals Service, and state entities, such as the State of California Department of Corrections and Rehabilitation.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Withdraws Guidance. Last week, CoreCivic withdrew its 2020 guidance due to the coronavirus impact, although the Company confirmed its 1Q20 guidance. We believe the most significant impact has been on ICE detainees and questions revolving around when or if the normal seasonal spike in detainees occurs this year. ICE accounted for 29% of revenue in 2019.
What If Matrix. Given all the uncertainty due to the virus, we performed a "What If" scenario for 2020. With 1Q20 confirmed, we basically are looking at the last 3 quarters. We assumed scenarios where revenue declined by $90 million, and operating and...
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.