"Corrections Corp. of America (NYSE: CXW) is one of the largest operators of private corrections facilities, has solid fundamentals and strong momentum," says Alex Kolb in Zacks Elite.
"The company operates 65 facilities, including 44 company-owned facilities, with a total design capacity of approximately 86,500 beds in 19 states and the District of Columbia.
"Corrections Corp. recently announced another strong quarter. After delivering above-expectations earnings in the second quarter, the company turned in more strong results in the third quarter.
"Earnings per share of 33 cents topped last year’s 30 cents and exceeded the Zacks Consensus Estimate by 3%.
"Total revenue jumped 5.5% to $426.0 million from the previous year’s $403.8 million. The increase in revenue can be mostly attributed to a 4.5% increase in average daily inmate populations and a 1.3% increase in revenue per compensated man-day.
"Management said the company was able to generate earnings ahead of expectations, despite a challenging environment, adding that inmate populations at several facilities came in ahead of expectations and CXW was able to control operating expenses.
"The company also noted that while the environment surrounding state budgets continues to be challenging, it remains optimistic about its long-term outlook.
"Corrections Corp. issued an earnings guidance, pegging its fourth-quarter range at 33 to 35 cents per share. For the full year, the company sees earnings ranging between $1.24 and $1.26 per share.
"Analysts polled by Zacks are in agreement, raising their 2009 projections from $1.25 to $1.26 per share over the past month. The fourth-quarter Zacks Consensus Estimate has held steady at 34 cents over the past 90 days.
"The company's return on equity (ROE) of 11% tops the industry average of 7%. CXW's net profit margin of 9% is well above the industry average of 1%. Shares of CXW have soared past the S&P 500 by more than 70% over the past year. Overall, we maintain a bulllish outlook."
