Reviewing Corrections Corp. of America (CXW) and Drive Shack (DS)
Corrections Corp. of America (NYSE: CXW) and Drive Shack (NYSE:DS) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, analyst recommendations, earnings, valuation and risk.
This is a summary of recent ratings for Corrections Corp. of America and Drive Shack, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Corrections Corp. of America||0||1||3||0||2.75|
Corrections Corp. of America currently has a consensus price target of $30.33, indicating a potential upside of 13.40%. Drive Shack has a consensus price target of $3.75, indicating a potential upside of 37.87%. Given Drive Shack’s higher probable upside, analysts clearly believe Drive Shack is more favorable than Corrections Corp. of America.
Valuation and Earnings
This table compares Corrections Corp. of America and Drive Shack’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||1.74||$452.80 million||$1.79||14.94|
|Drive Shack||$292.74 million||0.62||$8.22 million||($0.35)||-7.77|
Corrections Corp. of America has higher revenue and earnings than Drive Shack. Drive Shack is trading at a lower price-to-earnings ratio than Corrections Corp. of America, indicating that it is currently the more affordable of the two stocks.
This table compares Corrections Corp. of America and Drive Shack’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%|
Corrections Corp. of America pays an annual dividend of $1.68 per share and has a dividend yield of 6.3%. Drive Shack pays an annual dividend of $0.24 per share and has a dividend yield of 8.8%. 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. Drive Shack pays out -68.6% of its earnings in the form of a dividend. Drive Shack has increased its dividend for 4 consecutive years. Drive Shack is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Corrections Corp. of America has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Drive Shack has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.
Insider and Institutional Ownership
86.2% of Corrections Corp. of America shares are held by institutional investors. Comparatively, 41.8% of Drive Shack shares are held by institutional investors. 1.3% of Corrections Corp. of America shares are held by company insiders. Comparatively, 7.2% of Drive Shack shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Corrections Corp. of America beats Drive Shack on 10 of the 17 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.
Drive Shack Company Profile
Drive Shack Inc., formerly Newcastle Investment Corp., is a leisure company. The Company is an owner and operator of golf-related leisure and entertainment businesses. The Company’s portfolio consists of Drive Shack, which is engaged in developing nationwide network of golf entertainment venues; American Golf Corporation, which is a golf course company, and real estate-related assets. American Golf Corporation operates approximately 90 private, resort and public golf courses throughout the United States. It has a range of public and private golf courses in California, New York, and Georgia. It operates multiple facilities that provide golf, tennis, swimming and spa facilities, among others. Its online Pro Shop offers a range of golf gifts, such as personalized golf balls, golf luggage and accessories. Its public golf courses equipped with practice areas, golf shops, driving ranges, and food and beverage options.
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