Prison operator declares stock split

Boca-based Geo signals optimism

Boca Raton-based prison operator Geo declared a 3-for-2 stock split Monday, signaling upside growth that analysts believe will last throughout the year.

A stock split is generally “an expression of optimism about the company’s prospects,” said Toby Sommer, an analyst with SunTrust Robinson Humphrey in Altanta, which was one of the underwriters of Geo’s 6.9 million stock offering in the middle of this month that raised $281 million. The split will initially lower the stock price, but is expected to propel it higher.

Sommer said the company’s sales and profits are likely to rise throughout the year as a result of increased demand in several states, and as a result of the Trump Administration’s tougher immigration and enforcement policy.

He said the company has about 5,000 under-used beds that are likely to be filled as a result of the policy. Under the Trump administration, Immigration and Customs Enforcement has stepped up arrests and deportation of illegal immigrants.

Geo is the largest provider of detention services for Immigration and Customs Enforcement, the Federal Bureau of Prisons, and U.S. Marshals Service. One of those immigration centers is located at 3900 N. Powerline Road in Deerfield Beach.

Shareholders as of the close of April 10 will receive three shares for every two of common stock held.

The new shares will be payable April 24. The split will increase Geo's common stock outstanding to 123 million shares from 82 million.

In February, Geo announced it had agreed to acquire Community Education Centers, a private provider of rehabilitation services based in West Caldwell, N.J., for $360 million in cash.

The transaction would make Geo the largest provider of prison rehabilitation services in the country, said George Zoley, chairman and CEO, on a fourth-quarter conference call with analysts.

Geo owns or manages more than 87,000 beds worldwide, making the company the seventh largest correctional organization in the world, according to the company.

In 2016, Geo had revenues of $2.18 billion compared with $1.8 billion a year earlier.

Geo, which employs 483 workers at its corporate headquarters and regional offices, is building a new corporate headquarters off Interstate 95 and Yamato Road in Boca Raton, near its current leased office space at 621 NW 53rd St..

The parcel was purchased from Butters Construction for $9.9 million, according to Malcolm Butters, president.

On Monday, Geo stock closed down 26 cents or .48 percent at $45.71, slightly below its 52-week high of 49.42. The shares, traded on the New York Stock Exchange, were as low as $16.26 during the past year.