The GEO Group (GEO) – An Incremental Net Positive

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Wednesday, June 12, 2024

The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

More Available Funding. ICE’s termination of competitor CoreCivic’s South Texas contract (see our report on CoreCivic) will provide funding for additional beds. According to ICE, “Closing this facility will enable ICE to reallocate funding to increase the overall detention bed capacity across the system by an estimated 1,600 beds to better support operational needs. This additional bedspace is being pursued across the country and is expected to be available immediately.”

The Opportunity. First, we expect some portion of the nearly 1,600 detainees at South Texas may need to be re-homed. Second, as noted, the freed up funding will increase overall detention bed capacity by 1,600 beds. The Agency stated, “Today’s announcement will provide an overall increase in bedspace and operate at or above the FY24 appropriated 41,500 minimum bed requirement…” With the current detainee population just over 37,300, ICE could now access nearly 6,000 more beds. GEO has ample capacity, both at existing and idled facilities, to assist ICE.

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