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

It's been a good week for The GEO Group, Inc. (NYSE:GEO) shareholders, because the company has just released its latest yearly results, and the shares gained 2.3% to US$26.23. It looks like a pretty bad result, all things considered. Although revenues of US$2.4b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 35% to hit US$0.22 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for GEO Group

Taking into account the latest results, the most recent consensus for GEO Group from five analysts is for revenues of US$2.66b in 2025. If met, it would imply a meaningful 9.9% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 433% to US$1.17. In the lead-up to this report, the analysts had been modelling revenues of US$2.76b and earnings per share (EPS) of US$1.70 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

What's most unexpected is that the consensus price target rose 11% to US$41.20, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic GEO Group analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$17.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. The analysts are definitely expecting GEO Group's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2025 ranking favourably alongside historical growth of 0.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect GEO Group to grow faster 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. They also downgraded GEO Group's revenue estimates, but industry data suggests that it is expected to grow faster 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. We have forecasts for GEO Group going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for GEO Group (1 makes us a bit uncomfortable) you should be aware 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.