Barclays Prefers Corrections Corporation (CXW) Over Geo Group (GEO): Understanding Opportunities and Challenges

Barclays maintains an 'Overweight' on Corrections Corporation of America (NYSE: CXW) price target of $27.00.

Analyst, Manav Patnaik, said, "Until state budgets show marked improvement, contract momentum will likely remain slow. We prefer CXW (over Geo Group (NYSE: GEO)), primarily due to its lower leverage (2.7x vs. 5.0x) and subsequent flexibility to return value to shareholders and pursue growth opportunities (e.g. filling up empty beds could add $118M in EBITDA/$0.70 in EPS). Finally, CXW's $0.80/sh dividend also provides limited downside (at a ~3% yield)."

Manav Patnaik met with CXW management and took a tour of a Nashville facility. Patnaik is more optimistic about the return or opportunities and was also told by CNX that the company is not considering converting to a REIT at the moment.

For an analyst ratings summary and ratings history on Corrections Corporation of America click here. For more ratings news on Corrections Corporation of America click here.

Shares of Corrections Corporation of America closed at $25.11 yesterday.

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