While the S&P 500 is up 16% since March 2025, CoreCivic (currently trading at $20.50 per share) has lagged behind, posting a return of 7.9%. This may have investors wondering how to approach the situation.
Is now the time to buy CoreCivic, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is CoreCivic Not Exciting?
We don't have much confidence in CoreCivic. Here are three reasons you should be careful with CXW and a stock we'd rather own.
1. Long-Term Revenue Growth Flatter Than a Pancake
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, CoreCivic struggled to consistently increase demand as its $2.00 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and is a sign of lacking business quality.
2. Decline in Average available beds Points to Weak Demand
Revenue growth can be broken down into changes in price and volume (for companies like CoreCivic, our preferred volume metric is average available beds ). While both are important, the latter is the most critical to analyze because prices have a ceiling.
CoreCivic’s average available beds
came in at 70,330 in the latest quarter, and over the last two years, averaged 3.1% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests CoreCivic might have to lower prices or invest in product improvements to grow, factors that can hinder near-term profitability. 
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
CoreCivic historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.1%, somewhat low compared to the best business services companies that consistently pump out 25%+.
Final Judgment
CoreCivic isn’t a terrible business, but it doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 16.5× forward P/E (or $20.50 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at the most entrenched endpoint security platform on the market.
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