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Corrections Corporation of America Message Board

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  • Jake1349 Jake1349 Mar 27, 1999 6:00 PM Flag

    Well, if misery likes company, I'll be w

    There is an informative website for investors
    (www.nordby.com) which provides very short capsule summaries of
    all available brokers' reports on any stock you are
    interested in. The most recent posting on PZN was as
    follows:

    3/26/99: Paine Webber "reiterates
    attractive, hold unexpected conference call, expect bounce".

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • orld. But no REIT has put all these components together exactly like PZN.

      • 2 Replies to flipper_58
      • Due to certain aspects of the Company's
        relationship with CCA, the Internal
        Revenue Service (the
        "IRS") will not consider the payments
        that the
        Company received from CCA under the CCA Leases to be
        Rents from Real
        Property. First, the IRS will
        recharacterize the CCA Leases as service
        contracts or
        partnership agreements, rather than as "true leases." Second,
        the
        application of the Code's complex constructive ownership
        rules, together with
        the failure of the Ownership
        Limit contained in the Company's Charter to
        prevent
        such constructive ownership, will lead the IRS to
        recharacterize CCA as a
        Related Party Tenant. In either
        event, based upon the amount of rent
        payments
        received under the CCA Leases, the Company will not
        satisfy
        either the 75% Income Test or the 95% Income Test and,
        as a result, will lose its REIT status and default
        on its loans.

      • Indeed, Flipper, I'm focussing on the
        fundamentals, and all of them point to a bright future for PZN.
        The only question I have is how they will finance all
        these new prisons they're building. Equity? Debt? Half
        and Half? The last balance sheet I saw showed a
        pretty conservative debt/equity ratio, something I like
        (just look at Loewen Group implode under the crushing
        weight of its massive debtload). Will the new financing
        required dilute FFO per share?

    • Hmm, interesting, this conference call. When will it be held, or perhaps it has just been held? I'm expecting long term not just a bounce, but a climb into the stratosphere.

      • 1 Reply to crosswindlandings
      • � Forber Magazine article titled "Discarded
        Values" (11/16/98): considers PZN an undervalued
        stock�."sales are expected to nearly double in the next two
        years to $900 million."

        � Value Line Reports
        on CCA (reports dated 9/18/98 & 12/18/98): very
        positive reports on CCA and very positive comments about
        the merger with PZN. Value Line is not in the
        investment banking business so their reports are considered
        to be more unbiased, independent, and objective than
        the reports of brokerage firms.

        � PZN is the
        largest private prison operator in the U.S.

        � In
        a recent article about crowded prisons (3/17/99) it
        was stated that "private prisons should continue to
        show 20 percent to 25 percent revenue growth annually,
        even though the industry has slowed recently due to
        investor nervousness over mergers, public oppositon and
        other political factors".

        � At the present time
        private prison operators, as a whole, control less than 4
        percent of the country's jails and prisons in the U.S.A.
        so there is significant and substantial growth
        potential beyond this point.

        � The nature of PZN's
        business is such that PZN often uses the investment
        banking services of several brokerage firms who, through
        their positively-biased stock reports, can be
        "cheerleaders" for the stock.

        � Estimated 3-year FFO
        growth for PZN is 15%. With earnings (FFO) for this year
        estimated to be around $2.64 and a growth rate of 15%, PZN
        warrants a stock price of $39. Looking out ahead two years
        from now (Fiscal year Dec. 00) its earnings are
        estimated to be $3.00 which would justify a stock price of
        $45.

        � EOM

    • orld. But no REIT has put all these components together exactly like PZN.

 
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