Timothy Wengler (pictured), who works for Corrections Corp. of America as the warden of the privately run Idaho Correctional Center, has submitted his resignation roughly one month after the Nashville-based company acknowledged that his employees falsified thousands of hours of staffing records during much of 2012. CCA, which has a contract to run the Kuna, Idaho-based prison, said Wengler's last day will be May 31. Read more here.
Avondale Partners analyst Kevin Campbell has raised his price target on shares of Corrections Corp. of America after the prison manager reported first-quarter results that topped consensus estimates. Campbell, who also lifted his 2013 and 2014 estimates for adjusted funds from operations by about 5 percent, now sees CCA (Ticker: CXW) climbing to $44 from its current level of about $38.
Over at Credit Suisse, Edward Westlake and his team have raised their earnings estimates for Delek US Holdings after company executives detailed investment plans for their Texas and Arkansas refineries that should bring a quick and sizable payoff. Even though they gave up 3 percent on Monday, Delek shares (Ticker: DK) are still up 35 percent this year.
Corrections Corp. of America has been sued by the family of a security guard who was killed last year during an inmate riot at the company's Natchez, Miss., facility. Relatives of Catlin Carithers say CCA's policies endangered guards by "depriving inmates of basic needs and treating them inhumanely." The company says it has worked with law enforcement officials investigating the riot and supports the prosecution of those deemed responsible.
Analyst Kevin Campbell at Avondale Partners has run through the details of California Gov. Jerry Brown's new (court-mandated) plan to reduce overcrowding in the state's prisons and sees a mixed bag for Corrections Corp. of America. On the one hand, Campbell says competitor GEO Group looks better positioned to benefit from Brown's plan to use more private prison beds in the state because it has more capacity there. But on the other hand, Brown's plan also calls for a slower return of California inmates now being housed by CCA in other states. Rather than cut the out-of-state tally from more than 8,000 to about 2,700 by mid-2014 as previously envisioned, Brown now plans to trim that number to about 4,100.
At first glance Friday, investors appeared to be OK with Brown's plan, pushing CCA shares (Ticker: CXW) up 1.7 percent to $37.07.
Corrections Corp. of America is front and center in a Sunday New York Times story about the growing corporate trend of converting from a standard corporation to a real estate investment trust.
The Nashville-based prison operator (Ticker: CXW) expects to save $70 million on a REIT conversion in 2013 and recently announced a $675 million special dividend payout to shareholders, or about $6.63 per share.
One industry analyst tells the Times the interest in REIT conversion is the highest it’s been in 30 years. Another analyst says he expects more conversions to come in railroads, highways, mines, landfills, vineyards, farmland or other immovable structures that generate revenues.
The tax savings and potential benefit to shareholders of REIT conversions can’t be denied, but the trend worries some industry experts. Some think it could jeopardize the tax status of traditional trusts, while others question the need for more tax-saving strategies for corporations when there are already so many available.
Corrections Corp. of America executives said Thursday that an internal investigation of its operations at Idaho's largest prison show that workers there cooked the staffing books by some 4,800 hours. State officials say they, too, will take a close look at the company's records before making any decisions on what to do with the $29 million-per-year contract, which expires in 14 months.
Ray and company spokesman Steve Owen said the unstaffed hours account for a fraction of total staffing time during the seven-month stretch. The prison didn’t experience any significant increase in inmate violence during the period, they said. Even so, Owen said the company is taking the staffing vacancies and the falsified reports seriously.
“We will take appropriate disciplinary action with the involved personnel, and we will work to enhance the staffing, training and record keeping processes at the facility,” he said.
SEE ALSO: Staffing scrutiny for CCA in Idaho
Manav Patnaik at Barclays Capital on Tuesday raised his price target for shares of Corrections Corp. of America to $45 from $38 and reiterated his 'overweight' rating of the prison operator. Driving his move are improving fundamentals: Almost half of the company's state customers are budgeting for price increases and more than that expect more inmates in the coming year. Shares of CCA (Ticker: CXW) rose more than 3 percent Tuesday to more than $40 and have climbed about 14 percent so far this year.
A stock trading plan set up by Corrections Corp. of America President and CEO Damon Hininger this week exercised about 20,000 options that were granted him in 2010 and 2012 and then sold the resulting shares. When all was said and done, Hininger had earned a profit of almost $540,000 on the transactions. CCA shares (Ticker: CXW) have climbed almost 40 percent in the past year.