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1. Company Snapshot

1.a. Company Description

The GEO Group, Inc.engages in the ownership, leasing, and management of secure facilities, reentry facilities, and processing centers in the United States, Australia, and South Africa.It operates through four segments: U.S. Secure Services, Electronic Monitoring and Supervision Services, Reentry Services, and International Services.


The company provides counseling, education, and treatment for alcohol and drug abuse problems at various facilities; and compliance technologies for monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers, and pretrial defendants.It also offers secure facility management services, including security, administrative, rehabilitation, education, and food services at secure services facilities; reentry services comprising supervision of individuals in community-based programs and reentry centers, and provision of temporary housing, programming, employment assistance, and other services; and supervision and reporting services that improves the participation of non-detained aliens in the immigration court system.In addition, the company provides secure transportation services; and rehabilitation services, such as evidence-based, including cognitive behavioral treatment and post-release services, as well as academic and vocational classes in life skills and treatment programs under the GEO Continuum of Care platform; and develops new facilities based on contract, as well as designs, constructs, and finances the facilities.


The GEO Group, Inc.was founded in 1984 and is headquartered in Boca Raton, Florida.

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1.b. Last Insights on GEO

The GEO Group's recent performance was negatively impacted by allegations from ICE and a softer outlook, leading to a 44% decline in shares. Apis Capital Advisor sold 394,000 shares, estimated at $9 million. Despite beating Q3 earnings and revenue estimates, with quarterly earnings of $0.25 per share, the company's growth prospects are being questioned. However, recent record contract expansions, including ICE and US Marshals facilities, are expected to boost annual revenue by $460 million and improve margins, with a potential $500 million buyback signaling strong capital returns.

1.c. Company Highlights

2. GEO Group's Q3 2025 Earnings: A Strong Beat with Contract Wins and Debt Reduction

The GEO Group reported a robust third quarter in 2025, with quarterly revenues increasing by 22% year-over-year to approximately $682 million, driven primarily by new ICE contracts. The company's adjusted net income for the quarter was $35 million, or $0.25 per diluted share, beating analyst estimates of $0.22 per share. Adjusted EBITDA was around $120 million. The strong financial performance was largely attributed to the securing of new contracts worth over $460 million in incremental annualized revenues, the largest in the company's history.

Publication Date: Nov -19

📋 Highlights
  • New Contracts Secured:: Secured $460M in incremental annualized revenues, including $300M+ from ICE detainee housing and $60M from Adelanto facility reactivation and transportation expansion.
  • ISAP 5 Contract Win:: Won a 2-year $1B+ potential contract, generating $361M in Year 1 and $465M in Year 2, excluding Q4 guidance.
  • Debt Reduction & Leverage:: Reduced net debt by $275M YTD, ending Q3 with $1.4B net debt and 3.2x adjusted EBITDA leverage.
  • 2025 Financial Guidance:: Full-year adjusted EBITDA of $455–465M, net income of $1.81–1.85/share, and $682M revenues, driven by ICE contracts.
  • Share Repurchase Expansion:: Boosted buyback authorization to $500M, with $42M spent in 2025 and $100M planned for 2026, reflecting confidence in undervalued stock.

Contract Wins and Revenue Growth

The company secured significant new contracts, including housing ICE detainees at four facilities with approximately 6,000 beds, expected to generate over $300 million in incremental revenues at full occupancy. Additionally, the reactivation of the Adelanto ICE Facility and expansion of secure transportation services are expected to contribute to revenue growth. The new ISAP 5 program contract could see participant counts rise to 465,000, potentially driving further revenue increases.

Debt Reduction and Share Buyback

The GEO Group made significant progress in reducing its total net debt by $275 million during the quarter, closing with $1.4 billion in total net debt and a total net leverage of approximately 3.2x adjusted EBITDA. The company also launched a stock buyback program, increasing its authorization to $500 million, indicating confidence in its undervalued stock price. As of now, $42 million has been spent on share repurchases.

Valuation and Outlook

With a P/E Ratio of 22.59 and an EV/EBITDA of 8.31, the market seems to have priced in a certain level of growth and profitability. The company's guidance for 2025 suggests continued growth, with adjusted EBITDA expected to be $455 million to $465 million. Analysts estimate next year's revenue growth at 14.0%, indicating a positive outlook. As Mark Suchinski noted, the third quarter was impacted by start-up costs, and margins are expected to improve as these costs normalize. However, no guidance was given for 2026, leaving investors to speculate on future performance.

Operational Highlights and Future Prospects

The company's ISAP program is expected to ramp up early next year, driven by the administration's objectives. With idle facilities available and ongoing discussions with ICE regarding idle beds, there is potential for further revenue growth. The company's capability to monitor several hundred thousand people through electronic monitoring also positions it well for future opportunities.

3. NewsRoom

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Cerrado Gold Announces Third Quarter 2025 Financial Results

Nov -28

Source: globenewswire.com

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GEO Shares Down 44% as Fund Sells $9 Million in Stock Amid ICE Allegations and Softer Outlook

Nov -27

Source: fool.com

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Inside America's Shadow Infrastructure: Why GEO's Contract Engine Is Drawing Institutional Interest

Nov -21

Source: fool.com

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GEO Group: Contract Wins And Cash Flow Inflection Are Not Fully Priced In

Nov -14

Source: seekingalpha.com

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Geodrill Limited (GEO:CA) Q3 2025 Earnings Call Transcript

Nov -13

Source: seekingalpha.com

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Hodges Capital Loads Up On 507,000 GEO Group Shares

Nov -09

Source: fool.com

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The GEO Group, Inc. (GEO) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

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Geo Group (GEO) Beats Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.26%)

6. Segments

U.S. Secure Services

Expected Growth: 2.5%

The 2.5% growth of U.S. Secure Services from The GEO Group, Inc. is driven by increasing demand for correctional facilities, government initiatives to reduce recidivism rates, and a growing need for rehabilitation programs. Additionally, the company's diversified services, including detention management and reentry programs, contribute to its steady growth.

Electronic Monitoring and Supervision Services

Expected Growth: 1.8%

The 1.8% growth in Electronic Monitoring and Supervision Services from The GEO Group, Inc. is driven by increasing demand for alternative sentencing solutions, government initiatives to reduce recidivism rates, and the need for cost-effective correctional services. Additionally, advancements in monitoring technologies and expanding partnerships with law enforcement agencies contribute to the segment's growth.

Reentry Services

Expected Growth: 2.2%

The 2.2% growth in Reentry Services from The GEO Group, Inc. is driven by increasing demand for community-based rehabilitation programs, government initiatives to reduce recidivism rates, and the company's expansion of its day reporting center network. Additionally, the growing need for post-release support services and GEO's strategic partnerships with government agencies and non-profit organizations contribute to this growth.

International Services

Expected Growth: 1.5%

The 1.5% growth in International Services from The GEO Group, Inc. is driven by increasing demand for correctional facilities and immigration detention centers, expansion into new markets, and a growing need for rehabilitation programs. Additionally, government partnerships and contracts contribute to the segment's growth, as well as the company's ability to provide cost-effective solutions to governments.

7. Detailed Products

Correctional Facilities

The GEO Group, Inc. designs, develops, and operates correctional facilities for federal, state, and local government agencies.

Immigration Detention Centers

The GEO Group, Inc. operates immigration detention centers on behalf of the U.S. Immigration and Customs Enforcement (ICE).

Community-Based Services

The GEO Group, Inc. provides community-based services, including day reporting centers, residential reentry centers, and electronic monitoring programs.

Youth Services

The GEO Group, Inc. operates youth facilities, providing residential and non-residential services for at-risk youth.

Electronic Monitoring

The GEO Group, Inc. provides electronic monitoring services, including GPS tracking and home confinement programs.

Reentry Services

The GEO Group, Inc. provides reentry services, including job training, education, and counseling.

8. The GEO Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for GEO Group is moderate, as there are alternative private prison operators and government-run facilities that can provide similar services.

Bargaining Power Of Customers

The bargaining power of customers is low, as the government agencies that contract with GEO Group have limited alternatives and are often bound by long-term contracts.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low, as GEO Group is a large company with significant purchasing power, and suppliers are often dependent on the company for business.

Threat Of New Entrants

The threat of new entrants is low, as the private prison industry has significant barriers to entry, including high capital costs and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the private prison industry is moderate, as there are several established players competing for contracts, but the industry is also subject to significant regulatory and political pressures.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.30%
Debt Cost 6.82%
Equity Weight 41.70%
Equity Cost 6.82%
WACC 6.82%
Leverage 139.81%

11. Quality Control: The GEO Group, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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NL Industries

A-Score: 6.1/10

Value: 8.3

Growth: 4.8

Quality: 8.4

Yield: 10.0

Momentum: 1.0

Volatility: 4.0

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Napco Security Technologies

A-Score: 5.0/10

Value: 1.2

Growth: 8.8

Quality: 8.6

Yield: 1.0

Momentum: 6.0

Volatility: 4.7

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Arlo Technologies

A-Score: 4.3/10

Value: 4.9

Growth: 5.7

Quality: 3.7

Yield: 0.0

Momentum: 8.5

Volatility: 3.3

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Mistras

A-Score: 4.2/10

Value: 6.8

Growth: 4.3

Quality: 5.5

Yield: 0.0

Momentum: 3.5

Volatility: 5.3

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GEO Group

A-Score: 4.2/10

Value: 5.1

Growth: 2.3

Quality: 5.0

Yield: 0.0

Momentum: 9.0

Volatility: 3.7

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VerifyMe

A-Score: 2.9/10

Value: 7.4

Growth: 6.4

Quality: 3.2

Yield: 0.0

Momentum: 0.5

Volatility: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.11$

Current Price

17.11$

Potential

-0.00%

Expected Cash-Flows