What Happened?
Shares of private prison operator CoreCivic (NYSE: CXW) fell 12.2% in the morning session after the company reported third-quarter results that missed profit expectations and lowered its full-year earnings guidance.
While revenue grew a strong 18.1% year-over-year to $580.4 million and beat Wall Street's expectations, this was overshadowed by weakness in profitability. The company's adjusted earnings of $0.24 per share fell short of analysts' estimates of $0.26. More significantly, management slashed its full-year outlook, cutting its adjusted EPS guidance to a midpoint of $1.03, a 6.8% decrease from prior projections. Full-year EBITDA guidance was also lowered, signaling to investors that near-term profitability pressures outweighed the strong quarterly sales growth.
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What Is The Market Telling Us
CoreCivic’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for CoreCivic and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 5.2% as a report from The Conference Board showed its Consumer Confidence Index fell for a second consecutive month to 94.2, its lowest level since April 2025. The decline was driven by a more pessimistic view of current conditions, with the Present Situation Index falling by 7.0 points. Consumers' assessments of both business conditions and job availability weakened significantly, with the latter falling for the ninth straight month to a multiyear low. This drop in confidence is a concerning signal for the economy, as it often precedes a slowdown in consumer and business spending. For the business services sector, which is sensitive to economic cycles, weakening confidence can translate into reduced demand for a wide range of services.
CoreCivic is down 24.4% since the beginning of the year, and at $16.42 per share, it is trading 31.4% below its 52-week high of $23.94 from November 2024. Investors who bought $1,000 worth of CoreCivic’s shares 5 years ago would now be looking at an investment worth $2,737.
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