1 stock you would like to buy and hold for the rest of 2022

In the midst of an uncertain macroeconomic environment, looking for stocks with positive revenue and earnings guidance can be a good strategy. GEO Group (GEO) has provided an improved revenue and earnings guidance for FY 2022. Given its strong financials and discounted valuation, you may want to buy and hold the stock for the rest of the year. read on….

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GEO Group, Inc. (GEO) is a diversified government services provider specializing in the design, financing, development and support services for secure facilities, processing centers and community re-entry centers in the United States, Australia, South Africa and the United States. Empire.

GEO’s diverse services include custodial rehabilitation and post-release support through its GEO Continuum of Care, safe transportation, electronic monitoring, community-based programs, and corrective health and mental health care.

In the last reported quarter, GEO’s revenue and net income increased 4% and 28% year-over-year, respectively. The company has guided for a better end of FY 2022.

It has revised its revenue estimates from $2.20 billion to $2.35 billion. Its adjusted EPS is now expected to fall in the range of $1.28 to $1.34, up from $1.17 to $1.27 previously directed. In addition, its AFFO per share is expected to be in the range of $2.40 to $2.46, up from the $2.30 to $2.40 range previously directed.

In addition, the company expects its adjusted EBITDA to come in between $515 million and $530 million, which is higher than earlier estimates of $453 million to $471 million.

GEO is also working towards delivering. GEO’s executive chairman George C. “Our diversified business units have delivered strong results over the past two years, which has allowed us to reduce our net Sahara debt by approximately $375 million since the beginning of 2020, significantly reducing our balance sheet,” Zolle said. To complement our efforts to reduce net Sahara debt, we are pleased to recently announce a number of proposed transactions to comprehensively address the substantial majority of our outstanding debt maturities in 2023, 2024 and 2026. has been.”

The stock is down 8.5% year-over-year, but has gained 3.2% over the past year to close the previous trading session at $7.09.

Here’s what could impact GEO’s performance in the coming months:

strong financial

GEO’s revenue increased 4% year-over-year to $588.17 million for the second quarter ended June 30, 2022. The company’s operating income increased 31.2% year-over-year to $95.07 million. Plus, its net income rose 28% year-over-year to $53.72 million. In addition, its Adjusted EBITDA increased 11.8% year-over-year to $132.34 million.

mixed analyst estimates

GEO’s FFO for fiscal years 2022 and 2023 is expected to decline 29.9% and 13.9% year-on-year to $1.36 and $1.17, respectively. Its revenue is expected to grow 4.1% and 4.3% year-over-year to $2.35 billion and $2.45 billion, respectively, for fiscal years 2022 and 2023.

mixed profitability

In terms of 12-month net income margin, GEO’s 2.92% is 56.5% below the industry average of 6.71%. Similarly, its trailing-12-month gross profit margin of 28.92% is 2.3% below the industry average of 29.59%.

However, its 9.10% trailing-12-month leveraged FCF margin is 152.6% higher than the 3.60% industry average. Plus, its trailing-12-month EBITDA margin of 20.17% is 55.3% higher than the industry average of 12.98%.

discounted valuation

In terms of forward non-GAAP P/E, GEO’s 5.79x is 64.2% lower than the industry average of 16.21x. Its trailing-12-month EV/EBITDA of 7.28x is 40.2% lower than the industry average of 12.17x. Plus, the stock’s 0.39x trailing-12-month P/S of 1.35x is 70.7% lower than the industry average.

Power Rating Show Promise

GEO has an overall rating of B, which is equivalent to Buy in Us power rating Arrangement The POWR rating is calculated by considering 118 different factors, each of which is weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. GEO has a B grade for the value, which is in sync with the discounted valuation.

The stock is trading above its 50-day and 200-day moving averages of $6.68 and $7.03, justifying its B grade for momentum. It has a C grade for quality commensurate with its mixed profitability.

GEO is ranked #6 out of 49 stocks REIT – Miscellaneous industry. click here To access GEO’s Growth, Stability and Sentiment Ratings.

ground level

GEO is currently trading above its 50-day and 200-day moving averages, indicating an uptrend. The company has raised its revenue, earnings, AFFO and adjusted EBITDA expectations for FY 2022. In addition, the recent agreement to refinance its upcoming debt will allow the company to lengthen its maturity schedule and provide ample time for deliveries.

Given its strong financial position, discounted valuation and better guidance for FY22, it may be wise to buy and hold the stock.

GEO Group, Inc. (GEO) stacks up against its peers?

GEO has an overall POWR rating of B, which is equal to the buy rating. You may consider investing in the following REITs — diversified stocks with an A (strong buy) or B (buy) rating: Alliance Global Group, Inc. ,separation), Land Securities Group Plc (LDSCY), and Ladder Capital Corp (LADR,

Shares of GEO remained unchanged in premarket trading on Thursday. Year-on-year, GEO is down -8.52%, while the benchmark S&P 500 index has gained -12.09% during the same period.

About the Author: Dipanjan Banchur

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Since he was in grade school, Dipanjan was interested in the stock market. This led to him receiving a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in the financial markets.


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