The GEO Group, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Shareholders might have noticed that The GEO Group, Inc. (NYSE:GEO) filed its quarterly result this time last week. The early response was not positive, with shares down 9.3% to US$7.19 in the past week. Revenues were in line with forecasts, at US$608m, although statutory earnings per share came in 14% below what the analysts expected, at US$0.19 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for GEO Group
Taking into account the latest results, GEO Group's three analysts currently expect revenues in 2023 to be US$2.44b, approximately in line with the last 12 months. Statutory earnings per share are forecast to drop 11% to US$0.94 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.46b and earnings per share (EPS) of US$0.99 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
Despite cutting their earnings forecasts,the analysts have lifted their price target 14% to US$16.33, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic GEO Group analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$15.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GEO Group's past performance and to peers in the same industry. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2023. Historically, GEO Group's sales have shrunk approximately 0.3% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.9% per year. So it's pretty clear that, although revenues are improving, GEO Group is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on GEO Group. Long-term earnings power is much more important than next year's profits. We have forecasts for GEO Group going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - GEO Group has 1 warning sign we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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