Can CXW sustain its EPS surprise streak?

**CoreCivic's (CXW) ability to sustain its EPS surprise streak is uncertain** due to several factors influencing its financial performance and market position: 1. **Decline in Average Available Beds**: The company's average available beds have seen a 3.2% year-on-year decline over the last two years, indicating potential challenges in maintaining volume and demand for its services. This trend suggests that CXW may face hurdles in sustaining its EPS surprise if it cannot reverse or mitigate the decline in available beds. 2. **EPS Trend**: CoreCivic's EPS has declined by 22.8% annually over the last two years while revenue grew by 3.1%. This decline in profitability on a per-share basis could impact the company's ability to consistently surprise with EPS. For CXW to sustain an EPS surprise streak, it needs to demonstrate stable or increasing EPS, which its current trend does not indicate. 3. **Free Cash Flow Margin**: The dropping free cash flow margin is a concern. A company's ability to generate cash from its operations is crucial for sustaining surprises with EPS, as it affects its ability to invest in growth opportunities and return capital to shareholders. CXW's declining free cash flow margin may limit its capacity to continuously exceed expectations. 4. **Renewed Agreement with ICE**: On the positive side, CXW's renewed agreement with ICE to resume operations at the South Texas Family Residential Center is expected to generate approximately $180 million in annual revenue once fully operational. This long-term agreement could provide a stable revenue stream, potentially supporting CXW's EPS performance. 5. **Market Sentiment and Analysts' Views**: The consensus rating for CXW is a "Strong Buy" with an average analyst price target of $28, indicating optimism about the company's future. However, insider transactions show that insiders have sold a significant number of shares, which could signal a lack of confidence in the company's short-term prospects. In conclusion, while the renewed agreement with ICE presents a positive development for CXW's revenue, the company's challenges in maintaining average available beds, declining EPS trend, and dropping free cash flow margin cast uncertainty over its ability to sustain an EPS surprise streak. The market's optimism as reflected by the analyst consensus suggests that if CXW addresses its operational challenges and maintains the momentum from the ICE agreement, it may be able to sustain its EPS surprise trend. However, this is contingent on the company's performance in improving its core operational metrics and maintaining financial discipline.