Holder's Comment hits Shares of Boca's GEO Group

By Kevin Gale

Editor in Chief-South Florida Business Journal

Shares of detention center operator GEO Group are down $2.65, excluding the affects of a dividend payout, since the U.S. Attorney General made remarks that fewer non-violent drug offenders should be sent to prison.

Boca Raton-based GEO is one of the nation’s largest operators of prisons and other detention centers. Shares closed at $35.66 on Aug. 9 and were trading at $32.51 at 10:10 a.m. on Monday.

The stock went ex-dividend on a 50 cent quarterly payment on Aug. 15, so that added to the overall $3.15 drop, or 8.8 percent drop.

There’s some skepticism that Holder’s comments will turn into reality, which would mean GEO shares may have been oversold.

Forbes contributor points out that prisons are big business, often in rural areas where they are a major provider of jobs. He also mentioned that GEO reported strong quarterly earnings.

An article in the Miami Herald on Monday said leniency for drug sentences is a hard sell in Florida. A bipartisan legislative coalition is supporting ending minimum mandatory sentences for certain drug crimes, the Herald notes. Convictions have boomed amid abuse of prescription drugs.

However, prosecutors, the Florida Sheriff’s Association, prison officials and lobbyists oppose loosening the standards, the newspaper notes. Gov. Rick Scott and the Senate have both opposed loosening measures.

On Aug. 16, the Street.com said GEO was one of three buy-rated dividend stocks. One reason is that GEO Group has a 5.8 percent dividend yield. As of Aug. 15, GEO shares were up 43.5 percent over the past year and earnings were up 41.17 percent, surpassing the S&P 500.

GEO Group has had some controversy in its backyard. The company struck a naming rights deal for the Florida Atlantic University football stadium, which caused protests on campus. The deal was subsequently rescinded and university President Mary Jane Saunders stepped down in the wake of the naming rights deal and other controversies.

 

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About Pedro Heizer

I'm a person of simple taste, all I need is some country music, Batman, Star Wars, sports, coffee, and most importantly Jesus Christ, because what profits a man if he gains the whole world and loses his soul? View all posts by Pedro Heizer

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