On Wednesday, shares of Clean Harbors (CLH) rose as much as 9% to touch an all-time high of $71.63 after reporting a blowout fourth quarter. The environmental services company has been on a multiyear hot streak, and investors are cleaning up with this stock as a combination of acquisitions and new business drive unprecedented growth. But will Clean Harbors' shares continue to set records, or is it all washed up?
Clean Harbors reported fourth-quarter earnings per share of $0.72 a share, absolutely destroying the Street estimate of $0.49. The company said revenue grew 31% to $545.9 million. Analysts expected revenue of $506.8 million. For the year, sales topped $1.98 billion, up 14.5% year over year. Growth came from acquisitions, as well as from double-digit organic growth. On the conference call, management raised its guidance as energy-producing customers continue to hike capital spending. Clean Harbors now expects full-year 2012 revenue of $2.2 billion to $2.25 billion, compared with a prior estimate of $2.15 billion to $4.2 billion.
Oilfield service companies are benefitting from sky-high oil prices that drives increased spending on new wells. Clean Harbor's Oil & Gas Field Service business provides fluid handling, hauling and hazardous waste cleanup to the energy industry. The division protects groundwater and cleans up waste produced by the drilling process. That unit's results more than doubled as increased demand from shale-related projects in western Canada generated significant new business.
The company's other business units grew as well. The company's landfill business generated its strongest quarter of the year. The Field Services unit, which provides emergency waste cleanup, grew 17%. Industrial Services grew 50% because of acquisitions and stronger demand for waste disposal from industrial customers.
Some investors, however, may not like the unpredictable nature of some of the company's businesses. For example, 2011 revenues included $43.6 million related to the cleanup of the Yellowstone River oil spill. And in 2010, the company booked $253 million in revenue from its efforts to clean up oil spills in the Gulf of Mexico and Michigan. You can't always count on an oil spill to beat the Street, but remember that emergency spills are just a small part of the company's $2 billion in revenue.
The shares are not exactly undiscovered by investors. The stock is up more than 40% in the past year, as investors have fallen in love with the story. The shares trade at about 27x fiscal 2012 estimates of $2.50 a share, and 23x full-year 2013 estimates of $2.97 a share.
Like many of the companies I have written about lately, I would wait for a pullback to buy this stock. If oil prices remain high and drilling activity continues to be strong, Clean Harbors investors could clean up.