GEO
The GEO Group, Inc.
$30.15
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 1.6% below fair value
You pay
$30.15
Bear
$24.50
Fair
$30.63
Bull
$36.75
Bear
$24.50
-18.7%
$1.89 × 12x P/E
Fair
$30.63
+1.6%
$1.89 × 15x P/E
Bull
$36.75
+21.9%
$1.89 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
16.0x
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 $40.00 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $30.63 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 $40.00 (from 12 analysts). Our estimate is 29% below 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