Personal corrections firm GEO Group (NYSE:GEO) beat Wall Road’s income expectations in Q3 CY2025, with gross sales up 13.1% yr on yr to $682.3 million. Alternatively, subsequent quarter’s income steering of $663.5 million was much less spectacular, coming in 4.7% beneath analysts’ estimates. Its GAAP revenue of $1.24 per share was 58.8% above analysts’ consensus estimates.
Is now the time to purchase GEO? Discover out in our full analysis report (it’s free for lively Edge members).
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Income: $682.3 million vs analyst estimates of $665.7 million (13.1% year-on-year development, 2.5% beat)
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EPS (GAAP): $1.24 vs analyst estimates of $0.78 (58.8% beat)
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Adjusted EBITDA: $120.1 million vs analyst estimates of $120.1 million (17.6% margin, in line)
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Income Steerage for This fall CY2025 is $663.5 million on the midpoint, beneath analyst estimates of $696.2 million
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EPS (GAAP) steering for This fall CY2025 is $0.25 on the midpoint, lacking analyst estimates by 17.4%
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EBITDA steering for the complete yr is $460 million on the midpoint, beneath analyst estimates of $471.8 million
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Working Margin: 6%, down from 13.7% in the identical quarter final yr
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Market Capitalization: $2.1 billion
GEO Group’s third quarter was marked by substantial income development, however the market reacted negatively as margin pressures and near-term headwinds overshadowed the top-line beat. Administration attributed the gross sales positive factors to new and expanded contracts with U.S. Immigration and Customs Enforcement (ICE) and the U.S. Marshals, which drove facility occupancy and transportation companies. CEO George Zoley highlighted that “these facility activations have elevated our whole ICE capability to over 26,000 beds, and our present census is over 22,000, the very best ICE inhabitants we have ever had.” Nonetheless, greater staffing prices and the expense of ramping up new contracts weighed on total profitability.
Wanting forward, GEO Group’s steering displays uncertainty, with administration citing delays in new contract awards and the affect of presidency staffing and shutdowns as key dangers. CFO Mark Suchinski famous that lowered contract pricing for the ISAP 5 digital monitoring program and extra start-up prices at reactivated amenities will dampen margins within the upcoming quarter. Zoley emphasised, “The tempo of recent detention contracts has been slower than anticipated,” pointing to bureaucratic hurdles and ICE staffing shortages. The corporate is targeted on normalizing operations and integrating latest contract wins to assist future income development, however expects working challenges to persist within the close to time period.
Administration attributed Q3 efficiency to report contract wins, ICE facility activations, and safe transportation development, whereas noting that ramp-up prices and shifting contract economics pressured margins.
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ICE facility activations: GEO activated 5 main ICE detention amenities in 2025, elevating ICE mattress capability and census to report ranges. These contracts, together with Delaney Corridor and the North Lake Facility, considerably elevated occupancy and are anticipated to contribute extra as they normalize subsequent yr.
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ISAP 5 contract awarded: The corporate secured a brand new two-year contract for the Intensive Supervision Look Program (ISAP 5), a key digital monitoring initiative for immigrants, which incorporates each elevated participant counts and decrease unit pricing. Administration famous that this contract required margin concessions however positions GEO for future development in digital monitoring companies.
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Safe transportation growth: GEO expanded its safe floor and air transportation companies for ICE and the U.S. Marshals, signing a brand new five-year contract masking 26 federal judicial districts. This section is predicted so as to add roughly $60 million in incremental annualized income.
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Adelanto facility reactivation: The reopening of the Adelanto ICE Facility in California created extra start-up prices, together with hiring and time beyond regulation bills, which pressured margins this quarter however are anticipated to normalize in 2026 as operations stabilize.
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Share buyback and asset gross sales: GEO accomplished the sale of the Lawton, Oklahoma facility, utilizing proceeds to cut back debt and fund share repurchases. The board expanded the inventory buyback authorization to $500 million, with administration emphasizing opportunistic capital allocation amid perceived undervaluation.
Steerage for the subsequent quarter and yr is formed by contract ramp-ups, value administration measures, and uncertainty surrounding authorities actions and staffing ranges.
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ISAP 5 margin and blend shift: The brand new ISAP 5 contract options decrease pricing however anticipates a shift towards higher-intensity monitoring gadgets (comparable to ankle screens), which carry greater prices and repair depth. Administration expects this combine to ultimately profit margins as case administration companies increase, although short-term profitability is pressured by the transition.
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Contract ramp-up and normalization: Latest contract wins, notably the newly activated ICE amenities, require important start-up funding in staffing and operations. The corporate expects these prices to normalize in 2026, supporting a step-up in each revenues and profitability if facility utilization stays excessive.
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Authorities and staffing delays: Progress towards scaling up ICE detention capability is slower than anticipated, as a result of bureaucratic evaluations, authorities shutdowns, and ICE’s must double its workers. Administration views these delays as momentary, however notes that timing and quantity of recent contract awards stay outdoors GEO’s management.
Within the quarters forward, the StockStory crew will likely be watching (1) the ramp-up and normalization of recent ICE facility contracts and whether or not utilization charges stay excessive; (2) the tempo and mixture of participant development within the ISAP 5 program, together with the adoption of higher-intensity monitoring gadgets; and (3) progress in managing staffing prices and operational efficiencies as facility activations stabilize. Developments in authorities contract timing and ICE funding will even be vital indicators for GEO’s future outlook.
GEO Group at present trades at $15.13, down from $16.82 simply earlier than the earnings. Is the corporate at an inflection level that warrants a purchase or promote? The reply lies in our full analysis report (it’s free for lively Edge members).
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