Intrinsic value of CoreCivic, Inc. - CXW

Previous Close

$16.63

  Intrinsic Value

$2.88

stock screener

  Rating & Target

str. sell

-83%

Previous close

$16.63

 
Intrinsic value

$2.88

 
Up/down potential

-83%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as CXW.

We calculate the intrinsic value of CXW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  2,009
  2,189
  2,376
  2,571
  2,774
  2,985
  3,204
  3,431
  3,668
  3,914
  4,169
  4,435
  4,712
  5,001
  5,301
  5,614
  5,940
  6,281
  6,637
  7,008
  7,396
  7,801
  8,225
  8,668
  9,132
  9,618
  10,126
  10,658
  11,215
  11,799
Variable operating expenses, $m
  1,711
  1,864
  2,023
  2,189
  2,361
  2,540
  2,726
  2,919
  3,120
  3,329
  3,541
  3,767
  4,002
  4,247
  4,502
  4,768
  5,046
  5,335
  5,637
  5,952
  6,282
  6,626
  6,986
  7,363
  7,757
  8,169
  8,601
  9,053
  9,526
  10,022
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,711
  1,864
  2,023
  2,189
  2,361
  2,540
  2,726
  2,919
  3,120
  3,329
  3,541
  3,767
  4,002
  4,247
  4,502
  4,768
  5,046
  5,335
  5,637
  5,952
  6,282
  6,626
  6,986
  7,363
  7,757
  8,169
  8,601
  9,053
  9,526
  10,022
Operating income, $m
  298
  325
  353
  382
  413
  445
  478
  512
  548
  585
  628
  668
  710
  753
  798
  846
  895
  946
  1,000
  1,055
  1,114
  1,175
  1,239
  1,306
  1,375
  1,449
  1,525
  1,605
  1,689
  1,777
EBITDA, $m
  472
  514
  558
  604
  652
  701
  753
  806
  862
  920
  980
  1,042
  1,107
  1,175
  1,246
  1,319
  1,396
  1,476
  1,560
  1,647
  1,738
  1,833
  1,933
  2,037
  2,146
  2,260
  2,380
  2,505
  2,636
  2,773
Interest expense (income), $m
  56
  97
  109
  121
  133
  146
  159
  173
  188
  203
  218
  234
  251
  269
  287
  306
  326
  346
  368
  390
  414
  438
  464
  491
  519
  548
  578
  610
  644
  679
  716
Earnings before tax, $m
  200
  216
  232
  249
  267
  286
  305
  324
  345
  366
  394
  417
  441
  466
  492
  520
  548
  578
  609
  642
  676
  711
  748
  787
  828
  870
  915
  961
  1,010
  1,061
Tax expense, $m
  54
  58
  63
  67
  72
  77
  82
  88
  93
  99
  106
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  192
  202
  212
  223
  235
  247
  260
  273
  287
Net income, $m
  146
  158
  170
  182
  195
  208
  222
  237
  252
  268
  287
  304
  322
  340
  359
  379
  400
  422
  445
  468
  493
  519
  546
  574
  604
  635
  668
  702
  737
  775

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,001
  4,360
  4,733
  5,121
  5,525
  5,945
  6,382
  6,835
  7,306
  7,796
  8,305
  8,835
  9,387
  9,961
  10,560
  11,183
  11,834
  12,512
  13,220
  13,960
  14,733
  15,540
  16,384
  17,268
  18,191
  19,159
  20,171
  21,231
  22,342
  23,505
Adjusted assets (=assets-cash), $m
  4,001
  4,360
  4,733
  5,121
  5,525
  5,945
  6,382
  6,835
  7,306
  7,796
  8,305
  8,835
  9,387
  9,961
  10,560
  11,183
  11,834
  12,512
  13,220
  13,960
  14,733
  15,540
  16,384
  17,268
  18,191
  19,159
  20,171
  21,231
  22,342
  23,505
Revenue / Adjusted assets
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
Average production assets, $m
  2,967
  3,232
  3,509
  3,797
  4,097
  4,408
  4,732
  5,068
  5,417
  5,780
  6,158
  6,551
  6,960
  7,386
  7,829
  8,292
  8,774
  9,277
  9,802
  10,351
  10,923
  11,522
  12,148
  12,803
  13,488
  14,205
  14,956
  15,742
  16,565
  17,428
Working capital, $m
  -58
  -63
  -69
  -75
  -80
  -87
  -93
  -100
  -106
  -113
  -121
  -129
  -137
  -145
  -154
  -163
  -172
  -182
  -192
  -203
  -214
  -226
  -239
  -251
  -265
  -279
  -294
  -309
  -325
  -342
Total debt, $m
  2,014
  2,234
  2,462
  2,701
  2,948
  3,206
  3,473
  3,751
  4,040
  4,340
  4,652
  4,977
  5,315
  5,667
  6,034
  6,416
  6,815
  7,231
  7,665
  8,118
  8,592
  9,087
  9,605
  10,146
  10,712
  11,305
  11,926
  12,576
  13,256
  13,970
Total liabilities, $m
  2,453
  2,672
  2,901
  3,139
  3,387
  3,644
  3,912
  4,190
  4,479
  4,779
  5,091
  5,416
  5,754
  6,106
  6,473
  6,855
  7,254
  7,670
  8,104
  8,557
  9,031
  9,526
  10,044
  10,585
  11,151
  11,744
  12,365
  13,015
  13,695
  14,408
Total equity, $m
  1,548
  1,687
  1,832
  1,982
  2,138
  2,301
  2,470
  2,645
  2,827
  3,017
  3,214
  3,419
  3,633
  3,855
  4,087
  4,328
  4,580
  4,842
  5,116
  5,402
  5,701
  6,014
  6,341
  6,683
  7,040
  7,414
  7,806
  8,216
  8,646
  9,096
Total liabilities and equity, $m
  4,001
  4,359
  4,733
  5,121
  5,525
  5,945
  6,382
  6,835
  7,306
  7,796
  8,305
  8,835
  9,387
  9,961
  10,560
  11,183
  11,834
  12,512
  13,220
  13,959
  14,732
  15,540
  16,385
  17,268
  18,191
  19,158
  20,171
  21,231
  22,341
  23,504
Debt-to-equity ratio
  1.300
  1.320
  1.340
  1.360
  1.380
  1.390
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.460
  1.470
  1.480
  1.480
  1.490
  1.490
  1.500
  1.500
  1.510
  1.510
  1.510
  1.520
  1.520
  1.520
  1.530
  1.530
  1.530
  1.540
Adjusted equity ratio
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  146
  158
  170
  182
  195
  208
  222
  237
  252
  268
  287
  304
  322
  340
  359
  379
  400
  422
  445
  468
  493
  519
  546
  574
  604
  635
  668
  702
  737
  775
Depreciation, amort., depletion, $m
  174
  190
  205
  222
  239
  257
  275
  294
  314
  335
  352
  374
  398
  422
  447
  474
  501
  530
  560
  591
  624
  658
  694
  732
  771
  812
  855
  900
  947
  996
Funds from operations, $m
  321
  347
  375
  404
  434
  465
  498
  531
  566
  603
  639
  679
  720
  762
  807
  853
  902
  952
  1,005
  1,060
  1,117
  1,177
  1,240
  1,306
  1,375
  1,447
  1,522
  1,601
  1,684
  1,771
Change in working capital, $m
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
Cash from operations, $m
  326
  352
  380
  410
  440
  471
  504
  538
  573
  610
  647
  686
  728
  771
  816
  862
  911
  962
  1,015
  1,071
  1,129
  1,189
  1,253
  1,319
  1,388
  1,461
  1,537
  1,617
  1,700
  1,788
Maintenance CAPEX, $m
  -155
  -170
  -185
  -201
  -217
  -234
  -252
  -270
  -290
  -310
  -330
  -352
  -374
  -398
  -422
  -447
  -474
  -501
  -530
  -560
  -591
  -624
  -658
  -694
  -732
  -771
  -812
  -855
  -900
  -947
New CAPEX, $m
  -256
  -266
  -277
  -288
  -299
  -311
  -323
  -336
  -349
  -363
  -378
  -393
  -409
  -426
  -444
  -462
  -482
  -503
  -525
  -548
  -573
  -599
  -626
  -655
  -685
  -717
  -751
  -786
  -823
  -863
Cash from investing activities, $m
  -411
  -436
  -462
  -489
  -516
  -545
  -575
  -606
  -639
  -673
  -708
  -745
  -783
  -824
  -866
  -909
  -956
  -1,004
  -1,055
  -1,108
  -1,164
  -1,223
  -1,284
  -1,349
  -1,417
  -1,488
  -1,563
  -1,641
  -1,723
  -1,810
Free cash flow, $m
  -85
  -83
  -81
  -79
  -77
  -74
  -71
  -69
  -66
  -63
  -61
  -58
  -56
  -53
  -50
  -48
  -45
  -43
  -40
  -38
  -36
  -34
  -32
  -30
  -28
  -27
  -25
  -24
  -23
  -22
Issuance/(repayment) of debt, $m
  212
  220
  229
  238
  248
  257
  267
  278
  289
  300
  312
  325
  338
  352
  367
  382
  399
  416
  434
  453
  474
  495
  518
  541
  566
  593
  621
  650
  681
  713
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  212
  220
  229
  238
  248
  257
  267
  278
  289
  300
  312
  325
  338
  352
  367
  382
  399
  416
  434
  453
  474
  495
  518
  541
  566
  593
  621
  650
  681
  713
Total cash flow (excl. dividends), $m
  127
  137
  148
  159
  171
  183
  196
  209
  223
  237
  251
  266
  282
  299
  317
  335
  354
  373
  394
  415
  438
  461
  486
  511
  538
  566
  595
  626
  658
  692
Retained Cash Flow (-), $m
  -133
  -139
  -144
  -150
  -156
  -162
  -169
  -175
  -182
  -190
  -197
  -205
  -213
  -222
  -232
  -241
  -252
  -263
  -274
  -286
  -299
  -313
  -327
  -342
  -358
  -374
  -392
  -410
  -430
  -450
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -6
  -2
  3
  9
  15
  21
  27
  34
  41
  48
  54
  61
  69
  77
  85
  93
  102
  111
  120
  129
  139
  149
  159
  170
  180
  192
  203
  216
  228
  241
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  -6
  -2
  3
  6
  9
  11
  13
  14
  15
  15
  14
  13
  12
  11
  9
  8
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CoreCivic, Inc., formerly Corrections Corporation of America, is a diversified government solutions company. The Company provides partnership correctional, detention and residential reentry facilities and operates prison in the United States. The Company’s business offerings include CoreCivic Safety, CoreCivic Properties, and CoreCivic Community. The Company provides a range of solutions to government partners that serve the public good corrections and detention management, government real estate solutions, and network of residential reentry centers. As of March 31, 2017, the Company owned or controlled 48 correctional and detention facilities, owned or controlled 27 residential reentry centers, and managed an additional 11 correctional and detention facilities owned by its government partners, with a total design capacity of approximately 88,400 beds in 20 states.

FINANCIAL RATIOS  of  CoreCivic, Inc. (CXW)

Valuation Ratios
P/E Ratio 8.9
Price to Sales 1.1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow 6.9
Growth Rates
Sales Growth Rate 3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -58.5%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 98.4%
Total Debt to Equity 99.9%
Interest Coverage 5
Management Effectiveness
Return On Assets 8.3%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.6%
Return On Equity 15.1%
Return On Equity - 3 Yr. Avg. 14.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 31%
Gross Margin - 3 Yr. Avg. 30.3%
EBITDA Margin 24.4%
EBITDA Margin - 3 Yr. Avg. 23.1%
Operating Margin 16.1%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 12.3%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 11.9%
Net Profit Margin - 3 Yr. Avg. 12%
Effective Tax Rate 3.5%
Eff/ Tax Rate - 3 Yr. Avg. 3.5%
Payout Ratio 116.4%

CXW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CXW stock intrinsic value calculation we used $1836 million for the last fiscal year's total revenue generated by CoreCivic, Inc.. The default revenue input number comes from 0001 income statement of CoreCivic, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CXW stock valuation model: a) initial revenue growth rate of 9.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.1%, whose default value for CXW is calculated based on our internal credit rating of CoreCivic, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CoreCivic, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CXW stock the variable cost ratio is equal to 85.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CXW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for CoreCivic, Inc..

Corporate tax rate of 27% is the nominal tax rate for CoreCivic, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CXW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CXW are equal to 147.7%.

Life of production assets of 17.5 years is the average useful life of capital assets used in CoreCivic, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CXW is equal to -2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1415.059 million for CoreCivic, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 118.662 million for CoreCivic, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CoreCivic, Inc. at the current share price and the inputted number of shares is $2.0 billion.

RELATED COMPANIES Price Int.Val. Rating
GEO Geo Group Inc 17.24 17.73  hold
CTAS Cintas Corpora 257.85 106.99  sell
FSS Federal Signal 27.95 62.35  str.buy
GNTX Gentex Corpora 25.82 20.52  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.