Arizona officials have chosen Corrections Corp. of America to house 1,000 medium-security inmates, a contract that could add 3 percent to the company's annual profits.
Nashville-based CCA beat out four other bidders for the contract, which will take effect in January 2014. The move comes after state officials had pulled back from a much more aggressive private prison plan after two escapees from a facility run by a CCA competitor were accused of killing a couple in New Mexico.
Once at full capacity, the contract will add more than $8 million a year to CCA's operating margins, Avondale Partners analyst Kevin Campbell wrote last week. Per diluted share, that would add 5 cents to the company's bottom line. Analysts expect CCA to earn $1.65 per share in 2013.
The award pushed CCA shares (Ticker: CXW) up more than 3 percent on Tuesday to more than $34.40, their highest level since the fall of 1999.