Cornell Companies, Inc. provides correction, detention and rehabilitation services for adults and juveniles in correction centers in the United States. The company was founded in 1991, has a market cap. of $405 million and is headquartered in Houston, Texas.

Identifying pockets of growth in this economic environment has been extremely challenging as many companies struggle with a litany of serious issues that pressure their profitability. Cornell's second-quarter results demonstrate the company's ability to effectively grow its profits.

Second-Quarter Results

Revenue was up 3.4% from last year to $94.6 million. Net income jumped ahead to $5.3 million, up from $3.4 million last year, an increase of more than 55%. This produced earnings of 36 cents per share, easily outpacing analyst expectations of 30 cents per share.

This is the fourth time in the last four quarters that Cornell has surprised and beaten analyst estimates, having done so by an average of 5 cents, or 15.34%.

Guidance Raised

After the solid quarter, Cornell raised its full-year earnings guidance, saying it now expects to earn between $1.34 and $1.42 per share, up from the previous guidance between $1.26 and $1.33 per share.

The analyst community is bullish on Cornell's longer-term earnings capacities, with the next-year estimate projecting earnings of $1.61 per share, a 20% growth projection.

Valuations

At these levels, this stock is trading at a premium to the overall market, carrying a forward P/E multiple of 20X.

The Chart

Shares of CRN have had a great year, steadily advancing a long a very consistent trend line. Last week, this stock set a new 52-week and all-time high just above the $28 level. Since then, shares have retreated slightly but the long-term up trend is still very much in play. Take a look at the chart below.