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Advanced Drainage Systems (WMS)
:WMS
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Advanced Drainage Systems
(NYSE:WMS)
Rating:69Neutral
Price Target:
$133.00
▲( 19.82% Upside)
Positive Factors
Acquisition
The acquisition of Orenco is expected to leverage complementary portfolio offerings and operational fine-tuning.
Growth
Orenco has an ideal strategic fit alongside Infiltrator and should notably accelerate ADS' growth in the advanced wastewater treatment space.
Market Opportunity
The increasing recurrence of storm events is driving adoption of more resilient stormwater management infrastructure, providing further share opportunity for ADS.
Negative Factors
Agriculture Sales
Agriculture sales were the clear negative to start FY25 with a decrease of 25%.
Cost Pressures
Incremental headwinds are emerging for WMS, including material cost pressures and a more challenged end market backdrop.
Earnings Guidance
The FY'25 guidance cut reflects softness on all fronts: weaker end markets, higher raw material costs, and a market that is not receptive to cost-based price increases.
Advanced Drainage Systems (WMS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.53B
Dividend Yield0.58%
Average Volume (3M)676.27K
Price to Earnings (P/E)19.1
Beta (1Y)1.32
Revenue Growth1.04%
EPS Growth-10.78%
CountryUS
Employees5,705
SectorIndustrials
Sector Strength92
IndustryConstruction
Share Statistics
EPS (TTM)1.03
Shares Outstanding77,585,140
10 Day Avg. Volume955,739
30 Day Avg. Volume676,269
Financial Highlights & Ratios
PEG Ratio-5.75
Price to Book (P/B)102.00
Price to Sales (P/S)0.00
P/FCF Ratio25.65
Enterprise Value/Market Cap1.22
Enterprise Value/Revenue0.89
Enterprise Value/Gross Profit9.52
Enterprise Value/Ebitda3.16
Forecast
1Y Price Target
$141.29Price Target Upside27.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Advanced Drainage Systems Business Overview & Revenue Model
Company DescriptionAdvanced Drainage Systems, Inc. (WMS) is a leading provider of innovative water management solutions in North America. The company specializes in designing, manufacturing, and marketing a comprehensive range of high-performance thermoplastic corrugated pipe and related products. These products are utilized across various sectors, including agriculture, commercial, residential, and infrastructure, to manage stormwater and wastewater effectively.
How the Company Makes MoneyAdvanced Drainage Systems makes money primarily through the sale of its water management products, which include a diverse array of pipes, chambers, and related drainage solutions. The company's revenue model is heavily reliant on its manufacturing and distribution capabilities, which are supported by an extensive network of facilities and distributors. Key revenue streams include sales to government entities for infrastructure projects, agricultural sector sales for land drainage, and commercial and residential construction projects. Additionally, strategic partnerships with distributors and contractors enhance their market reach and contribute significantly to their earnings. The company also invests in research and development to innovate and maintain a competitive edge in sustainable water management solutions.
Advanced Drainage Systems Financial Statement Overview
Summary
Advanced Drainage Systems shows strong financial health with consistent revenue and profitability growth. The company demonstrates efficient cash flow management, although high leverage poses a potential risk. Improvement in equity balance and reduced leverage could enhance stability.Income Statement
Advanced Drainage Systems has demonstrated consistent revenue growth over the years, with a notable recovery in profitability metrics such as gross profit and net income margins. The gross profit margin for the latest year is impressive at 37.7%, and the company has maintained strong EBIT and EBITDA margins at 22.6% and 22.6%, respectively. Despite a slight decrease in revenue from the previous year, the overall trend is positive.78
Positive
Balance Sheet
The company's balance sheet shows a relatively high debt-to-equity ratio, which is a point of concern with a ratio of approximately 15.39. Stockholders' equity has significantly decreased, impacting the equity ratio, which stands low at about 2.5%. However, the company maintains a solid asset base with a total asset value of $3.69 billion. Return on Equity has improved, reflecting better profitability relative to equity.65
Positive
Cash Flow
Advanced Drainage Systems has shown a robust operating cash flow to net income ratio, indicating strong cash generation capability. The free cash flow has decreased compared to the previous year, but the company continues to generate positive free cash flow, reflecting sound financial management. The free cash flow to net income ratio suggests efficient cash utilization in operations.72
Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.90B | 2.87B | 3.07B | 2.77B | 1.98B | Gross Profit |
| 1.09B | 1.15B | 1.12B | 800.38M | 690.08M | EBIT |
| 657.44M | 732.13M | 719.31M | 411.92M | 344.52M | EBITDA |
| 657.44M | 907.39M | 868.46M | 554.55M | 493.51M | Net Income Common Stockholders |
| 450.17M | 509.92M | 507.09M | 271.33M | 224.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 463.32M | 490.16M | 217.13M | 20.13M | 195.01M | Total Assets |
| 3.69B | 3.27B | 2.90B | 2.65B | 2.41B | Total Debt |
| 1.43B | 1.41B | 1.32B | 944.64M | 841.50M | Net Debt |
| 962.35M | 915.69M | 1.11B | 924.51M | 646.49M | Total Liabilities |
| 2.05B | 1.99B | 1.91B | 1.54B | 1.35B | Stockholders Equity |
| 92.65M | 1.26B | 977.37M | 1.09B | 1.05B |
| Cash Flow | Free Cash Flow | |||
| 368.55M | 534.12M | 540.90M | 125.81M | 373.46M | Operating Cash Flow |
| 581.49M | 717.93M | 707.81M | 274.89M | 452.22M | Investing Cash Flow |
| -447.87M | -155.66M | -214.48M | -198.83M | -77.87M | Financing Cash Flow |
| -157.73M | -284.34M | -296.28M | -251.07M | -354.58M |
Advanced Drainage Systems Technical Analysis
Negative
111.00
Price Trends
110.57
Negative
114.26
Negative
128.79
Negative
Market Momentum
1.03
Positive
43.85
Neutral
28.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMS, the sentiment is Negative. The current price of 111 is below the 20-day moving average (MA) of 115.82, above the 50-day MA of 110.57, and below the 200-day MA of 128.79, indicating a bearish trend. The MACD of 1.03 indicates Positive momentum. The RSI at 43.85 is Neutral, neither overbought nor oversold. The STOCH value of 28.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WMS.
Advanced Drainage Systems Risk Analysis
Advanced Drainage Systems disclosed 26 risk factors in its most recent earnings report. Advanced Drainage Systems reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Advanced Drainage Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.50B | 20.23 | 18.10% | 0.72% | 1.38% | -3.80% | |
77 Outperform | $7.16B | 48.23 | 10.62% | ― | 5.93% | 3.50% | |
74 Outperform | $6.37B | 16.08 | 24.41% | 1.16% | 8.09% | 55.08% | |
72 Outperform | $4.29B | 17.71 | 36.73% | 0.91% | 4.30% | -0.69% | |
69 Neutral | $8.53B | 19.10 | 31.26% | 0.58% | 1.04% | -10.78% | |
66 Neutral | $6.10B | 31.14 | 23.07% | ― | -9.10% | -21.50% | |
64 Neutral | $4.39B | 11.81 | 5.20% | 249.38% | 3.96% | -12.36% |
* Industrials Sector Average
Performance Comparison
WMS
Advanced Drainage Systems
109.99
-63.51
-36.61%
LPX
Louisiana-Pacific
92.64
3.73
4.20%
SSD
Simpson Manufacturing Co
154.40
-17.47
-10.16%
TREX
Trex Company
56.92
-31.38
-35.54%
IBP
Installed Building Products
156.54
-52.11
-24.97%
AZEK
AZEK Company
49.24
1.85
3.90%
Advanced Drainage Systems Earnings Call Summary
Earnings Call Date:May 15, 2025
(Q4-2025)
| % Change Since: -8.78%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a year of modest growth with significant achievements in product sales and profitability, especially in high-margin areas. However, challenges such as a decline in fourth-quarter sales, economic uncertainties, and anticipated market pressures were also noted. The overall sentiment is cautiously optimistic, with plans for strategic investments and growth counterbalanced by economic headwinds.Q4-2025 Updates
Positive Updates
Increase in Net Sales
Fiscal 2025 concluded with net sales of $2.9 billion, representing a 1% increase over the prior year.
Double-Digit Growth in Key Markets
Significant growth was noted in Florida and Texas, with double-digit increases in various products including pipe and Infiltrator products.
Strong Performance in Water Quality Products
Water quality products, including Cultec retention/detention chambers, experienced double-digit growth.
High Adjusted EBITDA Margin
The company achieved a 30.6% adjusted EBITDA margin, marking the second most profitable year in its history.
Infiltrator's Strong Year
Infiltrator reported $560 million in sales, a 15% increase over the prior year, with organic sales growth driven by double-digit growth in septic tanks and advanced treatment products.
Strategic Diversification and Growth
The company strategically diversified its product mix and focused on higher-margin Allied products, which grew at a 10% CAGR over the period from FY 2016 to FY 2025.
Positive Cash Flow and Dividends
The company generated $581 million of cash from operations during fiscal 2025 and announced a 13% increase in its annual dividend.
Negative Updates
Decline in Fourth Quarter Net Sales
Net sales decreased by 6% in the fourth quarter due to challenges such as higher interest rates, economic uncertainty, and unfavorable weather conditions.
Challenging Economic Environment
The fiscal year faced headwinds in pricing and material costs, alongside a challenging economic backdrop impacting demand.
Postponement of Investor Day
The company decided to postpone its Investor Day due to high industry dynamics and economic uncertainty, affecting the ability to provide a clear three-year outlook.
Anticipated Decline in Certain End Markets
The company expects the nonresidential and residential end markets to face pressure from higher interest rates and economic uncertainty, with projected declines in these segments.
Absorption Impact on Manufacturing Costs
The company expects unfavorable manufacturing costs in the first quarter of fiscal 2026 due to fixed cost absorption and lower production volumes.
Company Guidance
In the fourth quarter of fiscal year 2025, Advanced Drainage Systems reported net sales of $2.9 billion, reflecting a 1% increase from the previous year. The company experienced a 3% growth in the domestic construction market, with significant double-digit growth in both Florida and Texas, particularly in pipe and Infiltrator products. Water quality products and Cultec retention/detention chambers also saw double-digit growth. The adjusted EBITDA margin was 30.6%, marking the second most profitable year in the company's history, despite challenges in pricing, material costs, and economic conditions. The Infiltrator segment reported $560 million in sales, a 15% increase from the previous year, driven by a 12% growth in septic tanks and a 33% growth in advanced treatment products. The company's fiscal year 2026 guidance anticipates net sales between $2.825 billion and $2.975 billion, with an adjusted EBITDA margin of 30.1% to 30.6%.Advanced Drainage Systems Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Advanced Drainage Systems Reports Q4 2025 Financial Results
Neutral
May 15, 2025
On May 15, 2025, Advanced Drainage Systems announced its financial results for the fourth quarter and fiscal year ending March 31, 2025. The company experienced a decrease in net sales and income in the fourth quarter, attributed to unfavorable weather conditions and economic uncertainties. Despite these challenges, ADS saw growth in its more profitable segments, with a focus on expanding its market share through new products and strategies. The company also declared a cash dividend of $0.18 per share, payable on June 16, 2025, reflecting its commitment to returning value to shareholders.
The most recent analyst rating on (WMS) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on Advanced Drainage Systems stock, see the WMS Stock Forecast page.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.