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Is Geo Group (GEO) Stock Undervalued Right Now?

Zacks

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Geo Group (GEO). GEO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.83. This compares to its industry’s average Forward P/E of 17.07. GEO’s Forward P/E has been as high as 13.63 and as low as 8.58, with a median of 11.31, all within the past year.


Investors should also note that GEO holds a PEG ratio of 1.47. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. GEO’s industry currently sports an average PEG of 2.77. Over the past 52 weeks, GEO’s PEG has been as high as 2.27 and as low as 1.43, with a median of 1.89.

Investors should also recognize that GEO has a P/B ratio of 2.47. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks attractive against its industry’s average P/B of 2.53. Within the past 52 weeks, GEO’s P/B has been as high as 3.07 and as low as 2.13, with a median of 2.64.

Finally, investors should note that GEO has a P/CF ratio of 8.74. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. GEO’s P/CF compares to its industry’s average P/CF of 16.68. Within the past 12 months, GEO’s P/CF has been as high as 11.94 and as low as 7.84, with a median of 9.80.

Value investors will likely look at more than just these metrics, but the above data helps show that Geo Group is likely undervalued currently. And when considering the strength of its earnings outlook, GEO sticks out at as one of the market’s strongest value stocks.


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