Small-cap stock CoreCivic (NYSE: $CXW) hasn’t done anything over the past year. But that might be about to change.
The Nashville, Tennessee-based company is one of the largest for-profit prison, jail, and detention centre contractors in the U.S.
Over the last 12 months, CXW stock hasn’t budged. The share price is up 0.27%, underperforming the broader market.
But CoreCivic might be on the cusp of a breakout, and the long-term performance of its stock is encouraging. In the past five years, the company’s share price has gained 144%.
With a market capitalization of less than $2 billion U.S., CoreCivic might best be viewed as a micro-cap stock. It’s currently trading at a reasonable 18 times future earnings estimates.
The reason CXW stock has been treading water over the last year are concerns about a backlash against private prisons in the wake of immigration raids and detentions in the U.S.
Reasons for optimism regarding CoreCivic are that law enforcement tensions in U.S. cities such as Minneapolis are starting to subside.
Additionally, CoreCivic is expected to post strong financial results when it reports on Feb. 11. Wall Street is forecasting earnings of $0.49 U.S. a share and revenue of $585.12 million U.S.
In its last print, CoreCivic reported 18.1% year‑over‑year revenue growth. The company currently owns and manages 44 detention facilities that have a combined 67,000 beds.
Most of CoreCivic’s revenue comes from government contracts at the municipal, state, and federal levels.
The company’s board of directors recently approved a $200 million U.S. share repurchase program, which will reduce its total share count.
And there are rumors that CoreCivic might finally issue a quarterly dividend to its stockholders this year as it accelerates capital returns. Currently, the company doesn’t pay a dividend.
Strong financial results, a dividend declaration, and more share repurchases could each be a catalyst that pushes CXW stock out of its slump and leads it to shoot higher.
