The GEO Group, Inc. (GEO)

[observer21]

Article pointing out that geo's revs are only 10 percent from federal. Everything else apparently un risked. Apparent way over reaction to the down side and could rebound hugely.

"CNN’s Paul La Monica doesn’t think it was a logical move. Earlier today he said on Twitter that the declines of almost 40 percent seen in The GEO Group Inc (NYSE: GEO) and Corrections Corp Of America (NYSE: CXW) were “stupid,” arguing that, while the DoJ’s decision was “undoubtedly bad” for the companies, they still have state contracts.

Last week, analysts at Canaccord explained that only about 11 percent of The GEO Group’s revenue derived from its exposure to the Federal Bureau of Prisons .

“While we see low risk to GEO's BoP contracts, political rhetoric on the elimination of private prisons has weighed on the stock recently,” the report added. “Adjusting out GEO's halfway houses (all federal halfway houses are operated by private players), GEO's exposure to the BoP is only just over 10%.”

Given this backdrop, the analysts believed the company carried a low cash flow risk, “given the challenges associated with executing a plan that would eliminate the federal use of private prisons.” One way or another, they think a worst-case scenario has already been priced in.
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