Geo Group and CoreCivic surged again on Monday after a huge rally last week spurred by earnings and elections. CoreCivic stock and Geo stock extended gains after President-elect Donald Trump picked immigration hardliner Tom Homan as his top border official.
Border Pick Tom Homan A Hardline Immigration Official
Homan previously was head of Immigration and Customs Enforcement (ICE) during Trump's first term. Trump said Sunday that Homan would lead the "deportation of illegal aliens" in his new administration starting Jan. 20, after vowing a mass deportation of undocumented migrants on the campaign trail.
"I've known Tom for a long time, and there is nobody better at policing and controlling our borders," Trump said on the Trump Media majority-owned social media platform TruthSocial.
Geo stock and CoreCivic also surged after Trump's first U.S. presidential election win. They broke out to highs last week after his second victory, scoring one of their best weekly gains since November 2016.
Investors seemed to bet — again – that a Trump-led White House would detain more undocumented migrants in the company's facilities.
Solid earnings last week also helped the prison operators.
Geo Stock, CoreCivic Stock
Shares of Geo Group and CoreCivic popped 4.5% and 6.3%, respectively, in Monday's stock market action.
CoreCivic stock scored a 29% election and earnings breakaway gap last Wednesday. It jumped above a 16.54 buy point in the biggest volume since shares began to consolidate in June, MarketSurge shows. The prison stock soared nearly 88% last week before paring the weekly gain to 69%.
Last Wednesday, Geo shares broke out in sympathy. Geo stock extended gains from the 16.47 cup-with-handle entry amid its own earnings report on Thursday. It skyrocketed almost 76% last week.
Geo Group Earnings, CoreCivic Earnings
Last week, prison and detention operators GEO Group and CoreCivic diverged on outlook after reporting strong third-quarter earnings.
CoreCivic revealed last Wednesday that it earned 19 cents per share, more than double estimates for 9 cents. The company hiked its full-year 2024 guidance for adjusted funds from operations for 2024 to $1.59-$1.65 per share — from $1.48-$1.56 — after Q3 occupancy grew from 72% to 75%. Analysts expected adjusted funds from operations of $1.49 a share, according to FactSet.
Geo Group last Thursday posted its first earnings gain after eight quarters of declines, FactSet shows. But the company missed views. Geo said it is now targeting full-year 2024 adjusted EBITDA of $470 million-$480 million, down from $485 million-$505 million previously. Analysts expect $488.2 million.
Prison Stocks Soared After 2016 Trump Win
In 2016, private prison stocks galloped ahead after Trump's first presidential election win.
Geo Group, which owns, leases and manages correctional facilities, advanced 107% in the three months after the election. Rival CoreCivic rose 149% in the same three-month period.
Many investors credited Trump's win for the initial rally in the prison stocks. Trump vowed to crack down on crime and illegal immigration, and private prisons and detention centers were seemingly one answer to overcrowding.
This was a sharp reversal from former President Barack Obama's order to phase out private prisons. In February 2017, then Attorney General Jeff Sessions turned the green light back on for private prisons.
Much has changed since then. The two main prison stocks quickly saw gains from the first Trump victory evaporate.
Both Geo stock and CoreCivic languished for much of the past year before breaking out to highs last week amid the elections and earnings.
