GEO - Why Shares of The GEO Group Rallied as Much as 11% This Morning
Shares of The GEO Group (NYSE: GEO) , a publicly traded owner and operator of prisons, rose a pleasing 11% or so in early trading on Monday. That gain had been pared to roughly 8% by 11:45 a.m. EDT, but the enthusiasm today is actually a notable change in direction. The company's first-quarter 2021 earnings update precipitated the positive price action.
Over the past year, The GEO Group's stock price has fallen by almost 50%. The quarterly dividend has gone from $0.48 per share to zero. That's not a great trend for a real estate investment trust (REIT) like The GEO Group, and it highlights the very real headwinds facing the company today.
One of the biggest, and hardest to quantify, is that the current administration in Washington, D.C., has taken a dim view of for-profit prison operators (ordering the U.S. Department of Justice to stop using companies like The GEO Group). To be fair, the federal government is only a portion of the REIT's business, but this move could bleed into other levels of government.
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Why Shares of The GEO Group Rallied as Much as 11% This Morning