GEO - GEO Group Offers Attractive 10% Yields On Long Term Debt

2024-01-22 14:02:48 ET

Summary

• Geo Group has faced challenges including a switch in corporate structure and regulatory issues, but its long-dated maturities offer high yields.
• The company's revenue grew by $50 million in the first three quarters of 2023, but operating expenses grew slightly more, leading to a drop in operating income.
• Geo Group has strengthened its capital position by increasing cash and decreasing long-term debt, and its strong cash flow allows for debt reduction and favorable refinancing terms.

The GEO Group ( GEO ), a rehabilitation facilities company, has seen its share of adversity of the past few years. The company had to switch its corporate structure from a REIT to a C Corp, and consequently eliminated its dividend. Additionally, GEO has had to endure regulatory challenges and last year, the company completed a debt exchange to provide it more financial flexibility. Back in December of 2022, I wrote how Geo Group's bonds were an attractive investment. Today, with two of GEO’s long dated maturities still yielding above 10% to maturity and will provide great income for noteholders....

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