The GEO Group, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that The GEO Group, Inc. (NYSE:GEO) filed its first-quarter result this time last week. The early response was not positive, with shares down 9.3% to US$7.19 in the past week. Revenues were in line with forecasts, at US$608m, although statutory earnings per share came in 14% below what the analysts expected, at US$0.19 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for GEO Group

Taking into account the latest results, GEO Group's three analysts currently expect revenues in 2023 to be US$2.44b, approximately in line with the last 12 months. Statutory earnings per share are forecast to descend 11% to US$0.94 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.46b and earnings per share (EPS) of US$0.99 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 14% to US$16.33, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on GEO Group, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$15.00 per share. This is a very narrow spread of estimates, implying either that GEO Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2023. That would be a definite improvement, given that the past five years have seen sales shrink 0.3% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.9% per year. Although GEO Group's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for GEO Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for GEO Group going out to 2024, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for GEO Group that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.