The GEO Group (GEO, Financial) has announced a significant contract modification with U.S. Immigration and Customs Enforcement, which came into effect on June 6. This adjustment activates a federal immigration processing center at GEO's D. Ray James Facility in Folkston, Georgia. This facility, which houses 1,868 beds, is part of an existing agreement involving the 1,118-bed Folkston ICE Processing Center, also owned by GEO.
As a result of this modification, GEO anticipates generating approximately $66 million in additional annual revenue in the first complete year of operation. This revenue boost is expected to come with profit margins that align with GEO’s typical company-owned Secure Services facilities. The contract ensures that GEO will exclusively support ICE in this federal facility, providing services such as security, maintenance, food service, and access to recreational, medical, and legal resources.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for The GEO Group Inc (GEO, Financial) is $41.80 with a high estimate of $50.00 and a low estimate of $35.00. The average target implies an upside of 55.10% from the current price of $26.95. More detailed estimate data can be found on the The GEO Group Inc (GEO) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, The GEO Group Inc's (GEO, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for The GEO Group Inc (GEO, Financial) in one year is $12.03, suggesting a downside of 55.36% from the current price of $26.95. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the The GEO Group Inc (GEO) Summary page.
GEO Key Business Developments
Release Date: May 07, 2025
- Revenue: $605 million for Q1 2025, compared to $606 million in Q1 2024.
- Net Income: $19.6 million or $0.14 per diluted share for Q1 2025.
- Adjusted EBITDA: $100 million for Q1 2025, down from $118 million in Q1 2024.
- Total Net Debt: Approximately $1.68 billion at the end of Q1 2025.
- Operating Expenses: Increased by approximately 3% year-over-year for Q1 2025.
- General and Administrative Expenses: Increased by approximately 9% year-over-year for Q1 2025.
- Effective Tax Rate: Approximately 9% for Q1 2025.
- Guidance for Full Year 2025: Net income expected to be $0.77 to $0.89 per diluted share on revenues of approximately $2.53 billion.
- Guidance for Q2 2025: Net income expected to be $0.15 to $0.17 per diluted share on revenues of $615 million to $625 million.
- Capital Expenditures: Expected to be between $120 million and $135 million for full year 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The GEO Group Inc (GEO, Financial) announced new contracts with ICE, including a 15-year contract for Delaney Hall in New Jersey and a phased activation contract for Northlake in Michigan, expected to generate over $130 million in annualized revenues.
- The company is well-positioned to support federal immigration enforcement priorities, with a significant investment of $70 million to expand detention capacity, secure transportation, and electronic monitoring services.
- GEO's utilization of ICE detention facilities is at its highest level in over five years, with approximately 16,000 beds currently in use.
- The company has a strong track record of providing specialized facilities and services, achieving high compliance rates with immigration court requirements through its ISAP program.
- GEO is actively reducing its debt, with plans to decrease net debt by $150 million to $175 million in 2025, and has no substantial debt maturities before April 2029.
Negative Points
- The first half of 2025 reflects higher overhead and operating expenses without corresponding revenues, impacting profitability.
- Revenue from the electronic monitoring and supervision services segment declined by approximately 10% year-over-year, with operating income falling nearly 20%.
- The company faces uncertainty regarding the timing of new contract awards and budget reconciliation processes, which could impact future growth.
- GEO's general and administrative expenses increased by approximately 9% due to reorganization and higher employee-related costs.
- The company has around 6,500 beds at idle facilities that have not yet received contract awards, indicating underutilized capacity.
