Critical Analysis: CyrusOne (CONE) vs. Geo Group Inc (The) (GEO)

CyrusOne (NASDAQ: CONE) and Geo Group Inc (The) (NYSE:GEO) are both mid-cap financials companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Profitability

This table compares CyrusOne and Geo Group Inc (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CyrusOne -13.60% -3.23% -1.21%
Geo Group Inc (The) 7.05% 14.85% 4.17%

Valuation and Earnings

This table compares CyrusOne and Geo Group Inc (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CyrusOne $529.10 million 10.63 $19.90 million ($0.98) -62.83
Geo Group Inc (The) $2.18 billion 1.48 $148.71 million $1.36 19.16

Geo Group Inc (The) has higher revenue and earnings than CyrusOne. CyrusOne is trading at a lower price-to-earnings ratio than Geo Group Inc (The), indicating that it is currently the more affordable of the two stocks.

Dividends

CyrusOne pays an annual dividend of $1.68 per share and has a dividend yield of 2.7%. Geo Group Inc (The) pays an annual dividend of $1.88 per share and has a dividend yield of 7.2%. CyrusOne pays out -171.4% of its earnings in the form of a dividend. Geo Group Inc (The) pays out 138.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Geo Group Inc (The) has raised its dividend for 4 consecutive years. Geo Group Inc (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for CyrusOne and Geo Group Inc (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CyrusOne 1 1 12 0 2.79
Geo Group Inc (The) 0 2 2 0 2.50

CyrusOne currently has a consensus target price of $62.67, suggesting a potential upside of 1.78%. Geo Group Inc (The) has a consensus target price of $33.78, suggesting a potential upside of 29.61%. Given Geo Group Inc (The)’s higher probable upside, analysts clearly believe Geo Group Inc (The) is more favorable than CyrusOne.

Risk & Volatility

CyrusOne has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Geo Group Inc (The) has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500.

Institutional and Insider Ownership

95.1% of CyrusOne shares are owned by institutional investors. Comparatively, 95.8% of Geo Group Inc (The) shares are owned by institutional investors. 1.6% of CyrusOne shares are owned by company insiders. Comparatively, 2.4% of Geo Group Inc (The) shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Geo Group Inc (The) beats CyrusOne on 12 of the 17 factors compared between the two stocks.

CyrusOne Company Profile

CyrusOne Inc. is a real estate investment trust. The Company is an owner, operator and developer of enterprise-class, carrier-neutral, multi-tenant data center properties. The Company’s data centers are generally purpose-built facilities with redundant power and cooling. The CyrusOne National IX Platform (the National IX Platform) delivers interconnection across states and between metro-enabled sites within its footprint and beyond. The Company has data centers in the United States, London and Singapore. As of December 31, 2016, the Company provided mission-critical data center facilities for 932 customers in 35 data centers and two recovery centers in 11 distinct markets (nine cities in the United States, London and Singapore) with approximately 3,904,000 net rentable square feet (NRSF). The Company provides round the clock security guard monitoring with customizable security features. As of December 31, 2016, the Company had approximately 1,657,000 NRSF under development.

Geo Group Inc (The) Company Profile

The GEO Group, Inc. is a real estate investment trust (REIT) specializing in the ownership, leasing and management of correctional, detention and re-entry facilities and the provision of community-based services and youth services in the United States, Australia, South Africa, the United Kingdom and Canada. As of December 31, 2013, its worldwide operations included the management and/or ownership of approximately 77,000 beds at 98 correctional, detention and community based facilities, including idle faclities and projects under development, and also included the provision of monitoring of more than 70,000 offenders in a community-based environment on behalf of approximately 900 federal, state and local correctional agencies located in all 50 states. The Company operates in four segments: United States Corrections and Detention segment, segment; International Services segment and Facility Construction and Design segment.

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