Investment Thesis
CoreCivic exhibits deteriorating operational quality with 12.7% revenue growth failing to translate into earnings expansion (net income flat YoY) and negative free cash flow of -$6.9M, indicating unsustainable business dynamics. High leverage (0.99x debt/equity) combined with weak profitability metrics (6.2% net margin, 2.7% ROE) and marginal interest coverage (3.0x) creates financial stress that threatens long-term sustainability, particularly problematic for a REIT structure dependent on cash generation.
Strengths
- Strong revenue growth of 12.7% YoY demonstrates operational scale expansion
- Healthy short-term liquidity with current ratio of 2.44x and $209.7M cash position
- Significant asset base of $3.4B provides operational foundation
Risks
- Negative free cash flow of -$6.9M is unsustainable and violates REIT cash distribution requirements
- Net income stagnation despite revenue growth indicates margin compression and operational deterioration
- High leverage at 0.99x debt/equity with only 3.0x interest coverage limits financial flexibility
- Critically low profitability metrics with 6.2% net margin and 2.7% ROE suggest poor capital efficiency
- Operating cash flow of $13.8M is inadequate relative to $20.7M capital expenditures
Key Metrics to Watch
- Free cash flow trajectory and return to positive generation
- Operating margin trend and net income growth reacceleration
- Debt/equity ratio and interest coverage movement
- Operating cash flow growth relative to revenue growth
Financial Metrics
Revenue
614.7M
Net Income
37.9M
EPS (Diluted)
$0.38
Free Cash Flow
-6.9M
Total Assets
3.4B
Cash
209.7M
Profitability Ratios
Gross Margin
N/A
Operating Margin
8.5%
Net Margin
6.2%
ROE
2.7%
ROA
1.1%
FCF Margin
-1.1%
Balance Sheet & Liquidity
Current Ratio
2.44x
Quick Ratio
2.44x
Debt/Equity
0.99x
Debt/Assets
58.6%
Interest Coverage
2.96x
Long-term Debt
1.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T09:52:20.303063 |
Data as of: 2026-03-31 |
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