Corrections Corp. of America (NYSE: CXW) and InfraREIT (NYSE:HIFR) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for Corrections Corp. of America and InfraREIT, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Corrections Corp. of America 0 1 3 0 2.75
InfraREIT 0 2 1 0 2.33

Corrections Corp. of America currently has a consensus target price of $30.33, indicating a potential upside of 19.23%. InfraREIT has a consensus target price of $22.00, indicating a potential downside of 1.52%. Given Corrections Corp. of America’s stronger consensus rating and higher possible upside, analysts plainly believe Corrections Corp. of America is more favorable than InfraREIT.

Dividends

Corrections Corp. of America pays an annual dividend of $1.68 per share and has a dividend yield of 6.6%. InfraREIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.5%. Corrections Corp. of America pays out 93.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. InfraREIT pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Corrections Corp. of America has increased its dividend for 4 consecutive years. Corrections Corp. of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Corrections Corp. of America and InfraREIT’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Corrections Corp. of America $1.82 billion 1.65 $452.80 million $1.79 14.21
InfraREIT $184.70 million 5.30 $160.52 million $1.20 18.62

Corrections Corp. of America has higher revenue and earnings than InfraREIT. Corrections Corp. of America is trading at a lower price-to-earnings ratio than InfraREIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Corrections Corp. of America and InfraREIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Corrections Corp. of America 11.62% 14.54% 6.51%
InfraREIT 28.31% 6.28% 3.13%

Risk & Volatility

Corrections Corp. of America has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, InfraREIT has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Insider & Institutional Ownership

86.2% of Corrections Corp. of America shares are held by institutional investors. Comparatively, 83.8% of InfraREIT shares are held by institutional investors. 1.3% of Corrections Corp. of America shares are held by company insiders. Comparatively, 28.0% of InfraREIT shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Corrections Corp. of America beats InfraREIT on 12 of the 16 factors compared between the two stocks.

Corrections Corp. of America Company Profile

CoreCivic, Inc., formerly Corrections Corporation of America, is a diversified government solutions company. The Company provides partnership correctional, detention and residential reentry facilities and operates prison in the United States. The Company’s business offerings include CoreCivic Safety, CoreCivic Properties, and CoreCivic Community. The Company provides a range of solutions to government partners that serve the public good corrections and detention management, government real estate solutions, and network of residential reentry centers. As of March 31, 2017, the Company owned or controlled 48 correctional and detention facilities, owned or controlled 27 residential reentry centers, and managed an additional 11 correctional and detention facilities owned by its government partners, with a total design capacity of approximately 88,400 beds in 20 states.

InfraREIT Company Profile

InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.

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