Critical Comparison: Brink’s (NYSE:BCO) and Geo Group (NYSE:GEO)

Geo Group (NYSE:GEO) and Brink’s (NYSE:BCO) are both mid-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, risk, earnings, analyst recommendations, institutional ownership and valuation.

Dividends

Geo Group pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Brink’s pays an annual dividend of $1.02 per share and has a dividend yield of 1.0%. Geo Group pays out 47.2% of its earnings in the form of a dividend. Brink’s pays out 23.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Brink’s has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Geo Group and Brink’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Geo Group	0	1	4	1	3.00
Brink’s	0	2	2	0	2.50

Geo Group presently has a consensus target price of $40.00, indicating a potential upside of 26.15%. Brink’s has a consensus target price of $154.00, indicating a potential upside of 45.29%. Given Brink’s’ higher possible upside, analysts plainly believe Brink’s is more favorable than Geo Group.

Volatility and Risk

Geo Group has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Brink’s has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Valuation & Earnings

This table compares Geo Group and Brink’s”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Geo Group	$2.83 billion	1.48	$254.37 million	$2.12	14.96
Brink’s	$5.26 billion	0.83	$199.70 million	$4.32	24.54

Geo Group has higher earnings, but lower revenue than Brink’s. Geo Group is trading at a lower price-to-earnings ratio than Brink’s, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

76.1% of Geo Group shares are held by institutional investors. Comparatively, 95.0% of Brink’s shares are held by institutional investors. 5.0% of Geo Group shares are held by company insiders. Comparatively, 1.0% of Brink’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Geo Group and Brink’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Geo Group	10.31%	10.42%	4.14%
Brink’s	3.30%	87.18%	4.95%

Summary

Brink’s beats Geo Group on 10 of the 18 factors compared between the two stocks.

About Geo Group

The GEO Group, Inc. (NYSE: GEO) engages in ownership, leasing, and management of secure facilities, processing centers, and community-based reentry facilities in the United States, Australia, the United Kingdom, and South Africa. The company also provides secure facility management services, including the provision of security, administrative, rehabilitation, education, and food services; reentry services, such as temporary housing, programming, employment assistance, and other services; electronic monitoring and supervision services; and transportation services; as well as designs, constructs, and finances new facilities through projects. The company was founded in 1984 and is based in Boca Raton, Florida.

About Brink’s

The Brink’s Co. engages in providing cash management services, digital retail solutions, and ATM managed services. It operates through the following geographical segments: North America, Latin America, Europe, and Rest of World. The North America segment operates in the U.S. and Canada. The Latin America segment refers to the operations in Latin American countries. The Europe segment relates to operations in European countries. The Rest of World segment focuses on the operations in the Middle East, Africa, and Asia. The company was founded by Perry Brink and Fidelia Brink on May 5, 1859 and is headquartered in Richmond, VA.