GEO - The GEO Group Inc. (GEO) - 10-Q Review

10-Q Overview. We were able to perform a deep dive into The GEO Group's 10-Q which was released November 5th. And while nothing in the 10-Q changes our assessment of GEO and its business prospects, the 10-Q does provide some enhanced details we want to share.Populations The surge at the Southwest border and re-opening of the U.S. Court system, which we have detailed in previous reports, are positively impacting results. Aggregate net increases in populations, transportation services and/or rates contributed an incremental $18.8 million of revenue primarily due to increased occupancies at the USMS and ICE facilities mainly due to the large increase in the number of crossings at the Southern border during 2021.New Business Helping to Offset Losses. While the non-renewal of contracts by the BOP and USMS, the loss of certain managed contracts, and the sale of the Youth Services unit will ultimately result in the loss of nearly $400 million of revenue, new contracts such as the ICE contracts in California and the re-purposing of Moshannon Valley add back an estimated $270 million of revenue. While it would have been preferable to retain the BOP business, GEO's ability to replace a substantial portion of that revenue goes to the resiliency of the business model, in our view. Favorable Risk/Reward. We continue to believe GEO shares represent a favorable risk/reward situation. We are maintaining our Outperform rating and a $15 per share 12-month price target. While COVID and the political rhetoric remain headwinds, there are limited alternatives to GEO's services and we believe the Company's real estate assets and high quality contracts eventually will be properly valued. Read More >>