GEO

GEO's FY2025 results mark a clear inflection. Revenue grew 8.6% to $2.63B after three years of stagnation around $2.4B, and net income jumped to $254M from $32M as the company lapped one-time charges and benefited from the policy reset. The MD&A frames this as 'an unprecedented opportunity' tied to the Trump Administration's Executive Order reversing the prior DOJ directive against private criminal detention contracts, alongside expanded ICE enforcement priorities. Average occupancy rose to 89.2% from 87.2%, and the company is investing aggressively — capex tripled to $198M — to expand detention capacity, secure transportation, and electronic monitoring for the federal government.

The optionality in idle capacity is the most underappreciated piece. Management discloses 6,646 vacant beds (5,896 Secure + 750 Reentry) with combined net book value of just $192.5M, carrying $23.4M annually in costs. If reactivated at 2025 average per-diems and occupancy, these would generate ~$240M in incremental revenue and $0.20-$0.25 in incremental EPS — roughly 9% revenue uplift and 11-14% EPS uplift on top of an already-growing base. At $29.38, the stock trades at 16.1x trailing EPS and 1.5x sales, undemanding for a business with 16.9% ROE and a structural tailwind from federal policy.