Allied Waste shares up after 1Q profit soars on price boost

NEW YORK—Shares of Allied Waste Industries Inc. jumped in Thursday after the company said first-quarter profit more than doubled, as higher prices offset a drop in landfill volume.

The stock gained 69 cents, or 5.6 percent, to $13.05 in the afternoon session. Shares traded as high as $13.26 earlier in the session.

Quarterly earnings after preferred dividends increased to $66.4 million, or 17 cents per share, from $30.5 million, or 8 cents per share, during the same period last year.

Allied Waste said its results in the most recent quarter included charges related to the closure of a Midwest landfill totaling 3 cents per share. Excluding the charge, Allied Waste said it earned 20 cents per share in the quarter.

Analysts polled by Thomson Financial forecast a profit of 17 cents per share. Thomson estimates usually exclude special items.

The Phoenix-based company said revenue rose 3 percent to $1.48 billion from $1.44 billion. The revenue jumped was fueled in part by a 6.1 percent price increase, which itself was offset by a 4.1 percent decrease in volume, Allied Waste said in a release.

Volume growth continues to be hampered by a weak housing construction market and the slowing economy, the company said.

UBS Investment Research analyst Jason Feldman kept a "Buy" rating and $13 price target after the earnings report, and said Allied Waste's business strategy and stock price are currently "attractive."

"The waste industry is somewhat recession-resistant," Feldman said in a note to clients. "Historically, waste stocks have outperformed during periods of slowing economic growth and easing interest rates."

For 2008, Feldman raised his profit estimate to 92 cents per share from 89 cents per share. Analysts expect a profit of 91 cents per share.