It's Not Too Late to Buy Darling International

On March 5, I suggested it would be a great idea for investors to buy shares of Darling International (NYSE: DAR  ) before the company commissioned its Diamond Green Diesel joint venture with oil giant Valero Energy (NYSE: VLO  ) .

After all, as CEO Randall Stuewe pointed out at the time, had the two-years-in-the-making DGD plant been up and running that quarter, it would have generated net income of more than $41 million for both Valero and Darling. While that may seem like a drop in the bucket for Valero, which earned $2.1 billion last year, it would have boosted Darling's fourth-quarter net income by nearly a third.

In addition, the stock had fallen after the rendering specialist missed analysts' estimates with its fourth-quarter earnings report. However, those results were actually fairly solid, considering earnings per share fell just 2.4% year-over-year despite a 12% plunge in fat prices. 

As it stands, shares of Darling have risen almost 15% since then, outperforming the S&P 500's return over the same period by more than 8%:

DAR Total Return Price Chart

DAR Total Return Price data by YCharts

Shares of Darling were also up by as much as 5% during intraday trading Friday after the rendering specialist posted better-than-expected first quarter earnings.

As luck would have it, higher material volumes combined with a significant rebound in fat prices -- which were just 4% lower year over year -- helped Darling increase revenue 15% to $445.4 million. As a result, net income also rose 13.3% to $32.4 million for the quarter, or $0.27 per share. Both numbers beat analysts' estimates, which called for earnings of $0.26 per share on $410.8 million in sales.

You haven't missed the boat
Even better, this outperformance came in spite of the fact that construction isn't even finished on the Diamond Green Diesel plant. As promised last quarter, management reiterated that construction is nearing completion and the company is "at the early stages of a phased commissioning" with the project's tank farm, wastewater treatment, and pretreatment systems.

When all is said and done, Darling is anticipating "a late second quarter start-up and, barring any unforeseen issues, full production during the third quarter." As per his usual illustration, Stuewe also noted that had DGD been operating at planned capacity in the first quarter, it would have increased earnings per share by around $0.10, or more than 37%.

In the end, then, despite Darling's recent outperformance, I'm convinced that it's not too late to buy shares of this solidly profitable company whose core business remains essential to keeping our landfills free of billions of pounds of food waste every year. So buy now, Fools, and you can feel even better about your clean profits down the road.

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