What Happened?
Shares of private corrections company GEO Group (NYSE: GEO) fell 11.1% in the morning session after it reported strong third-quarter results but issued a disappointing forecast for the fourth quarter. Investors appeared to focus on the future outlook rather than the past quarter's performance. The company's guidance for fourth-quarter revenue, at a midpoint of $663.5 million, came in 4.7% below analysts' estimates. Furthermore, the forecast for GAAP earnings per share of $0.25 at the midpoint missed analyst expectations by 17.4%. This disappointing outlook overshadowed the strong third-quarter report, in which revenue grew 13.1% year on year to $682.3 million, beating estimates. Similarly, its GAAP earnings per share of $1.24 was 58.5% above analysts’ consensus estimates.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy GEO Group? Access our full analysis report here.
What Is The Market Telling Us
GEO Group’s shares are very volatile and have had 28 moves greater than 5% over the last year. But moves this big are rare even for GEO Group and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 7.1% on the news that the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation. The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
GEO Group is down 46% since the beginning of the year, and at $15.27 per share, it is trading 56.8% below its 52-week high of $35.35 from January 2025. Investors who bought $1,000 worth of GEO Group’s shares 5 years ago would now be looking at an investment worth $1,807.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.
