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Corrections Corporation Of America - An Innovative Yield Strategy

Published Mon, 18 May 2015 13:03:24 -0400 on Seeking Alpha

Corrections Corporation of America (NYSE: CXW) is the largest private owner of correctional and detention facilities in the United States. The company owns or controls 51 facilities covering 71,000 beds, and manages another eleven facilities covering 14,000 beds, in 18 states and the District of Columbia, which is 40% of all privately managed and 60% of all privately owned prison beds in the U.S. In addition to prison operations, the company also provides residential re-entry and prisoner transportation services for government agencies.In 2013, the company converted to a REIT. In its prior corporate structure, it was subject to a 36% tax rate, however, the REIT tax advantages left it with just a 3% tax rate in first quarter 2015. As a REIT, it is required to pay out 90% of its income as shareholder distributions. The quarterly distribution was $0.48 in 2013, raised 6% to $0.51 in 2014, and raised another 6% to $0.54 in 2015. This represents a 6.2% yield at today's stock price of $34.93.The company reported solid results on May 6th for the first quarter of 2015. Revenue was up 5.4% year/year and above the consensus estimate. Adjusted EPS were up 11% year/year to $0.49, exceeding the guidance of $0.44 to $0.45 and the consensus estimate of $0.45. AFFO was up 17% year/year to $0.68, exceeding the guidance of $0.61 to $0.62.The company's balance sheet is strong, with $74M in cash, $319M available on its credit facility, leverage at 3.1x, a 3.6% average interest rate on debt, and... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORECIVIC 18.06   12.0 1.51 1.76 9.83


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