Stock Analysis

Is Now An Opportune Moment To Examine CoreCivic, Inc. (NYSE:CXW)?

  •  Updated
NYSE:CXW
Source: Shutterstock

While CoreCivic, Inc. (NYSE:CXW) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$11.67 and falling to the lows of US$9.19. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CoreCivic's current trading price of US$9.19 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CoreCivic’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for CoreCivic

What's The Opportunity In CoreCivic?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that CoreCivic’s ratio of 12.34x is trading slightly below its industry peers’ ratio of 15.82x, which means if you buy CoreCivic today, you’d be paying a decent price for it. And if you believe CoreCivic should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, CoreCivic’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of CoreCivic look like?

earnings-and-revenue-growth
NYSE:CXW Earnings and Revenue Growth September 25th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 8.4% expected over the next year, growth doesn’t seem like a key driver for a buy decision for CoreCivic, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in CXW’s growth outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at CXW? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on CXW, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To help with this, we've discovered 2 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in CoreCivic.

If you are no longer interested in CoreCivic, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether CoreCivic is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About NYSE:CXW

CoreCivic

CoreCivic, Inc. owns and operates partnership correctional, detention, and residential reentry facilities in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth0
Past Performance1
Financial Health2
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Good value with imperfect balance sheet.