GEO
The GEO Group, Inc.
$23.52
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 27.9% below fair value
You pay
$23.52
Bear
$26.09
Fair
$32.60
Bull
$39.13
Bear
$26.09
+10.9%
$2.31 × 12x P/E
Fair
$32.60
+38.6%
$2.31 × 15x P/E
Bull
$39.13
+66.4%
$2.31 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
10.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $24.50 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $32.60 per share.
Warnings
The company pays out 85% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $24.50 (from 12 analysts). Our estimate is 41% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples