Is CoreCivic Stock Fairly Valued?

The stocks of private prison companies have performed fairly well over the last year, given the Justice Department and Trump Administration’s push for increased prison sentences and incarceration. Major private prison companies have indicated that they expect more federal contracts, as the Department of Justice and Department of Homeland Security detain more people. CoreCivic – previously known as Corrections Corporation of America – is the largest operator of private prisons in the country. We have created an interactive dashboard analysis to estimate the company’s valuation based on its expected financials and core operating metrics for 2018. You can make changes to these variables to arrive at your own price estimate for the stock.

We arrive at a $22 price estimate for CoreCivic, which is about in line with the current market price, based on revenue projections of $1.8 billion for 2018, with projected EBITDA of around $400 million. We use an EV/EBITDA multiple of about 10x for the company, and take into account net debt of $1.45 billion. The charts below, taken from our dashboard, show our estimates and forecasts in more detail.

We estimate CoreCivic’s revenue using the following steps. We first estimate the company’s average population by multiplying average available beds and average compensated occupancy. Then, we estimate total management revenues by multiplying this metric by the revenue per compensated man-day, considering 365 days a year. Total revenues are estimated by adding management revenues and other revenues.

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