Profit ratio

What does the stock price of CoreCivic, Inc. (NYSE:CXW) indicate?

CoreCivic, Inc. (NYSE:CXW), may not be a large-cap stock, but it has garnered a lot of attention due to a substantial price increase on the NYSE over the past few months. Less hedged, small caps see more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price compared to its true value? Let’s take a look at CoreCivic’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for CoreCivic

Is CoreCivic still cheap?

Good news for investors – CoreCivic is still trading at a fairly cheap price according to my multiple price model, where I compare the company’s price-earnings ratio to the industry average. I used the price/earnings ratio in this case because there is not enough visibility to predict its cash flow. The stock’s ratio of 17.06x is currently well below the industry average of 22.42x, meaning it is trading at a lower price than its peers. CoreCivic’s stock price also appears to be relatively stable compared to the rest of the market, as indicated by its low beta. If you think the stock price should eventually reach its industry peers, a low beta might suggest it’s unlikely to do so anytime soon, and once it does, it may be difficult to fall back into an attractive buy range.

What kind of growth will CoreCivic generate?

NYSE: CXW Earnings and Revenue Growth as of May 30, 2022

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. Although in CoreCivic’s case, it should deliver a relatively unexciting 1.3% earnings growth, which doesn’t help bolster its investment thesis. Growth doesn’t seem to be the main reason for a buying decision for CoreCivic, at least in the short term.

What does this mean to you :

Are you a shareholder? Even though the growth is relatively muted, as CXW is currently trading below the industry PE ratio, now may be the perfect time to accumulate more of your stock holdings. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping tabs on CXW for a while, it might be time to get into the stock. Its future earnings outlook is not yet fully reflected in the current share price, which means it’s not too late to buy CXW. But before making investment decisions, consider other factors such as the track record of its management team, in order to make an informed investment decision.

Keep in mind that when it comes to analyzing a stock, the risks involved should be noted. For example, CoreCivic has 3 warning signs (and 1 which is potentially serious) that we think you should know about.

If you are no longer interested in CoreCivic, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.