CoreCivic (CXW)

Private prison operator CoreCivic (NYSE:CXW) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 18.1% year on year to $580.4 million. Its non-GAAP profit of $0.24 per share was 7.7% below analysts’ consensus estimates.

Company Overview

Originally founded in 1983 as the first private prison company in the United States, CoreCivic (NYSE:CXW) operates correctional facilities, detention centers, and residential reentry programs for government agencies across the United States.

Rising concerns over physical security, cybersecurity threats, and workplace safety regulations will present opportunities for companies in this sector. AI and digitization will enhance surveillance, access control, and threat detection, which could benefit key players in Safety & Security Services. These trends could also introduce ethical and regulatory concerns over data privacy and automated decision-making in security operations, giving rise to headline risks. Finally, increasing scrutiny on private security practices and evolving criminal justice policies again mean that companies in the space need to operate with the utmost care or risk being the poster child of abuse of power.

CoreCivic's main competitors include The GEO Group, Inc. (NYSE:GEO), which is the other major publicly traded private prison operator in the United States, as well as Management and Training Corporation, a privately held company. CoreCivic also competes with government agencies that operate their own correctional and detention facilities.

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $2.09 billion in revenue over the past 12 months, CoreCivic is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, CoreCivic grew its sales at a sluggish 1.6% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. CoreCivic’s annualized revenue growth of 5.4% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, CoreCivic reported year-on-year revenue growth of 18.1%, and its $580.4 million of revenue exceeded Wall Street’s estimates by 7.3%.

Looking ahead, sell-side analysts expect revenue to grow 12.3% over the next 12 months, an improvement versus the last two years. This projection is healthy and indicates its newer products and services will fuel better top-line performance.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

CoreCivic’s operating margin has been trending up over the last 12 months and averaged 11.3% over the last five years. Its profitability was higher than the broader business services sector, showing it did a decent job managing its expenses.

Analyzing the trend in its profitability, CoreCivic’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, CoreCivic generated an operating margin profit margin of 22.5%, up 13.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CoreCivic’s full-year EPS grew at a weak 1.9% compounded annual growth rate over the last four years, worse than the broader business services sector.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

CoreCivic’s EPS grew at an astounding 27.4% compounded annual growth rate over the last two years, higher than its 5.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into CoreCivic’s earnings quality to better understand the drivers of its performance. CoreCivic’s operating margin has expanded over the last two yearswhile its share count has shrunk 6%. Improving profitability and share buybacks are positive signs for shareholders as they juice EPS growth relative to revenue growth.

In Q3, CoreCivic reported adjusted EPS of $0.24, up from $0.20 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects CoreCivic’s full-year EPS of $0.99 to grow 53.5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

CoreCivic has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.8% over the last five years, better than the broader business services sector.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

CoreCivic historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.9%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, CoreCivic’s ROIC averaged 3.9 percentage point increases over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

CoreCivic reported $71.78 million of cash and $1.04 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $347.3 million of EBITDA over the last 12 months, we view CoreCivic’s 2.8× net-debt-to-EBITDA ratio as safe. We also see its $60.09 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly CoreCivic blew past analysts’ revenue expectations this quarter. On the other hand, its full-year EPS guidance missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $18.59 immediately following the results.

Updated: December 4, 2025 at 11:01 PM EST

When considering an investment in CoreCivic, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

CoreCivic doesn’t pass our quality test. First off, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its cash profitability fell over the last five years. On top of that, its weak EPS growth over the last four years shows it’s failed to produce meaningful profits for shareholders.

CoreCivic’s P/E ratio based on the next 12 months is 14.4x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $29.88 on the company (compared to the current share price of $18.59).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.