Geo Group Shares Plunge on Weak Outlook and CEO Departure

The stock fell 15% to $13.41 by Thursday afternoon, at one point hitting a session low of $12.81. This latest slide deepens a year-long decline for the company, with shares now down roughly 52% over the past 12 months. The sell-off was triggered by a forecast that failed to meet Wall Street’s expectations for both the upcoming quarter and the full fiscal year.

Adding to investor uncertainty, CEO J. David Donahue confirmed he will step down at the end of February. The company’s founder and current Executive Chairman, George Zoley, is slated to return to the chief executive role on March 1. This transition comes as Geo Group navigates a tightening fiscal environment and shifting demand for private detention services.

A Weakening Outlook

While Geo Group’s fourth-quarter performance actually exceeded expectations—reporting revenue of $707.7 million against a predicted $667.3 million—its forward-looking statements painted a different picture. For the first quarter, management expects earnings per share between 17 and 19 cents, trailing the 24 cents projected by analysts polled by FactSet. The full-year outlook was similarly cautious:

• Annual revenue is projected between $2.9 billion and $3.1 billion.
• Full-year earnings are expected to range from $0.99 to $1.07 per share.
• Analysts had previously forecasted higher annual earnings of $1.27 per share.

The discrepancy between the strong fourth-quarter results and the tepid guidance suggests potential headwinds in the coming months. While the company recorded a fourth-quarter profit of $31.8 million, more than double the prior year's $15.5 million, the market remains focused on the lower-than-expected margins predicted for the remainder of 2024.