GEO
The GEO Group, Inc.
$31.77
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 16.4% above fair value
You pay
$31.77
Bear
$21.84
Fair
$27.30
Bull
$32.76
Bear
$21.84
-31.3%
$1.82 × 12x P/E
Fair
$27.30
-14.1%
$1.82 × 15x P/E
Bull
$32.76
+3.1%
$1.82 × 18x P/E
Adjust Assumptions
15.0x
1.82$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
17.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$40.00
Divergence from AlphaVal
32%
Summary
Applying a 15x P/E to adjusted EPS of $1.82, the base-case value is $27.30 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 32% 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