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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 Dec 21, 1999 10:09 AM Flag

    Comparables

    In trying to be objective in estimating a future
    price you'd have to look at the industry. WHC trades at
    10 times 2000 earnings estimates, CRN at 7 times
    2000 earnings estimates, CSCQ at 8 times 2000 earnings
    estimates. If we call the average 8.5 as the average P/E
    that puts C Corp PZN at $8.5 next year.

    I'm not
    saying I agree with the above analysis but if you trying
    to be conservative you can't assume industry P/E's
    will expand, especially with a overall market at very
    high valuations and rates increasing.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • If we were to go to a C corp, what would be a reasonable conservative growth rate to assume?

      • 1 Reply to RWLooney
      • Growth rate? The problem is at these stock price
        levels I don't see anyone in the industry as being
        largely accretive. I have not done the numbers but
        roughly looking around it is not promising. So I see the
        growth rate hindered for awhile I'd think, sound
        right?

        It's interesting to look at CRN for example. They are
        trying to raise $350mm for a new project, debt and
        equity. Now I don't know what pro-forma numbers are on
        their project but look at their return on equity....8%.
        their stock sells below book value. How they are going
        to get their deal done I don't know.

        Bricks
        and mortar marketing are killing the margins in this
        industry it appears. Companies like CRN just are not big
        enough at this time it seems to absorb such big
        expenses. Doc realized this problem and attempted this REIT
        structure to help raise big capital, out of the frying pan
        and into the fire.

        IMO, PZN will be the only
        one that can pull this industry out of it's tail
        spin. It's the only one big enough to meet customer
        demands.

 
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