NEW YORK (TheStreet) -- Waste Management (WM - Get Report) stock is up over 6% Tuesday to a new 52-week high thanks to a 20% jump in fourth-quarter earnings from the previous year.
Tuesday's earnings beat and the company's full-year earnings guidance range of $2.48 to $2.55 per share, means Waste Management will continue to outperforme expectations. The Houston company had an average price target of $53 before its earnings report. Shares are currently at $54.40, up nearly 6% for the year to date.
The largest waste collection and disposal company in the U.S. also raised its quarterly dividend to 38.5 cents per share from 37.5 cents. This means Waste Management, which already had an attractive dividend payout of 2.79%, compared to the 2% average payout of companies in the S&P 500 (SPX) , is becoming more generous.
Investors looking for value shouldn't waste time jumping in. The analysts have been wrong and will be forced to correct their mistake by raising estimates and price targets.
The company reported fourth-quarter net income of $590 million, reversing a loss in the same period a year earlier. On a per-share basis, Waste Management said it earned a profit of $1.28. When excluding one-time gains and costs, earnings were 67 cents per share, beating estimates by 7 cents per share.
Fourth-quarter revenue fell 1.7% year over year to $3.44 billion, missing estates by roughly $50 million. The company said revenue was affected, in part, by the divestment of its Wheelabrator Technologies unit last year and the impact of currency rates. However, the company was able to increase its volumes sequentially for four straight quarters, which is a sign that its business continues to grow.
Equally important, the cost of operations improved by almost $100 million during the quarter. This bodes well for shareholders because ongoing costs reductions will boost long-term earnings per share, allowing the company more room to raise the dividend and buy back more stock.
In short, Waste Management, which returned $172 million to shareholders during the quarter, is operating like a well-oiled machine. With the company already projecting it will beat analysts' full-year earnings projections and raise its dividend, now's the time to pick up some shares.
By Richard Saintvilus
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