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Corrections Corporation of America

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The prison business is still chugging along. Corrections Corporation of America recently surprised on the Zacks Consensus Estimate for the 12th quarter in a row. This Zacks #1 Rank (strong buy) is also a value stock with a forward P/E of 14.6.

Corrections Corporation of America ("CCA") is the largest owner and manager of prisons for federal, state and local governments in the United States. The company owns and operates about 60 facilities, including 44 that are company-owned, with a capacity of more than 85,000 beds in 19 states and the District of Columbia.

CCA Surprised By 2.8% in the Third Quarter

On Nov 2, CCA reported its third quarter results and surprised on the Zacks Consensus by a penny. Earnings per share were 37 cents compared to the consensus of 36 cents.

Revenue rose 1.9% to $433.5 million from $425.3 million in the year ago quarter primarily due to a 2.3% jump in the average daily population to 80,851.

State revenue also rose 2.4% due to the commencement of 2 managed-only contracts during the third quarter of 2010 at Moore Haven Correctional Facility and Graceville Correctional Facility and from higher inmate populations in the state of Georgia.

California, however, saw a reduction in population due to the company's decision not to renew the contract for nearly 900 beds at the Florence facility.

Raised Full Year Guidance

CCA is optimistic about the rest of the year and into 2012.

On Jan 1, 2012, it expects to take ownership at the Lake Erie Correctional Institution and in the first quarter of 2012 CCA is hoping to complete construction and commence operations at the Jenkins Correctional Center.

It is also awaiting the decision from Arizona on its 5,000 bed request for proposal as well as a managed-only opportunity for about 9,000 beds in Harris County, Texas.

The company raised its full year earnings guidance to the range of $1.50 to $1.51 from its previous guidance of $1.47 to $1.49.

Zacks Consensus Estimates Rise

Given that CCA raised its full year guidance and posted another earnings beat, it's not surprising that the analysts also raised their estimates for 2011 and for 2012.

3 out of 4 estimates have moved higher in the last week for 2011, pushing the Zacks Consensus up a penny to $1.50. This is in line with the company's guidance and is earnings growth of 6.6%.

For 2012, 3 out of 6 estimates moved higher in the same time period. The 2012 Zacks Consensus rose to $1.55 from $1.53 per share. This is earnings growth of just 3.4%.

CCA Is a Value Stock

Shares of CCA have been moving in a narrow trading range the last 2 years.

Earnings have also steadily climbed in that same time period which means that CCA's valuation has stayed attractive.

In addition to a forward P/E under 15, which is the level I use as a cut-off for value stocks, it also has a price-to-book ratio of 1.7. A P/B under 3.0 usually indicates a value stock.

The company also has a solid 1-year return on equity (ROE) of 11.4%.

With CCA, an investor is getting a value stock in an industry with steady demand and an excellent track record of surprising on the estimate.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at traceyryniec.