Advanced Drainage Systems (WMS)
NYSE:WMS
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Advanced Drainage Systems
(NYSE:WMS)
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Rating:64Neutral
Price Target:
$146.00
▼(-4.81% Downside)
Action:Reiterated
Date:05/21/26
The score is driven primarily by strong operating profitability and cash generation, tempered by balance-sheet risk from a much thinner equity base. Technicals are a clear headwind (below major moving averages with negative MACD), while valuation is only middling given a ~30x P/E and low yield. Earnings call guidance and NDS integration progress are supportive but accompanied by near-term inflation and demand-volatility risks.
Positive Factors
Cash Generation
Sustained high cash conversion (OCF ~2x net income; FCF ~70% of net income) provides durable internal funding for capex, acquisitions, dividends, and buybacks. This reduces reliance on markets and supports disciplined capital allocation through construction cycles and investment in growth initiatives.
Negative Factors
Thin Reported Equity / Leverage
A sharply reduced reported equity base magnifies balance-sheet risk: even moderate earnings or asset write-downs could erode cushions, increasing refinancing or covenant sensitivity. Despite current moderate leverage metrics, the thinner equity amplifies volatility in returns and financial flexibility.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash Generation
Sustained high cash conversion (OCF ~2x net income; FCF ~70% of net income) provides durable internal funding for capex, acquisitions, dividends, and buybacks. This reduces reliance on markets and supports disciplined capital allocation through construction cycles and investment in growth initiatives.
Read all positive factors
Advanced Drainage Systems (WMS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.39B
Dividend Yield0.47%
Average Volume (3M)822.75K
Price to Earnings (P/E)24.2
Beta (1Y)1.20
Revenue Growth5.03%
EPS Growth-5.49%
CountryUS
Employees5,705
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)5.48
Shares Outstanding76,595,710
10 Day Avg. Volume941,009
30 Day Avg. Volume822,747
Financial Highlights & Ratios
PEG Ratio-4.41
Price to Book (P/B)5.52
Price to Sales (P/S)3.50
P/FCF Ratio18.74
Enterprise Value/Market Cap1.17
Enterprise Value/Revenue4.00
Enterprise Value/Gross Profit10.75
Enterprise Value/Ebitda13.08
Forecast
1Y Price Target
$184.00Price Target Upside19.97% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)6.34
Revenue Forecast (FY)$3.45B
Advanced Drainage Systems Business Overview & Revenue Model
Company Description
Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products, and drainage solutions for use in the underground construction and infrastructure marketplace in the United St...
How the Company Makes Money
Advanced Drainage Systems makes money primarily by manufacturing and selling water management products—most notably thermoplastic (primarily HDPE) corrugated pipe systems—through distributors, contractors, and other channel partners serving constr...
Advanced Drainage Systems Earnings Call Summary
Earnings Call Date:May 21, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call portrays a broadly positive financial and strategic picture: robust revenue and margins, strong free cash flow and balance-sheet metrics, successful close and early integration of the $1.0B NDS acquisition with expected synergies, and clear FY27 guidance. Principal risks include near-term inflationary pressures (diesel and carrier rates), choppy demand with pull-forward buying that could create short-term 'air pockets,' regional competitive pressure versus concrete, and softness in single-family residential and agriculture. Management has multiple operational levers (recycling, internal fleet, pricing actions, SG&A management) and a conservative, cash-focused approach that support confidence in navigating the headwinds.Positive Updates
Strong Q4 and Fiscal Year Financial Performance
Q4 revenue increased 10% to $677 million (including NDS). Adjusted EBITDA increased 6% in Q4 with a 27.8% adjusted EBITDA margin. Full-year adjusted EBITDA margin was 31.6% (second-highest in company history).
Negative Updates
Residential and Pipe Pressure
Pipe revenue decreased 2% in Q4. Residential sales increased 18% including NDS, but excluding NDS residential sales declined 1%. Management highlighted single-family housing headwinds from affordability and interest rates and expects a slightly more negative outlook for single-family housing in FY27.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong Q4 and Fiscal Year Financial Performance
Q4 revenue increased 10% to $677 million (including NDS). Adjusted EBITDA increased 6% in Q4 with a 27.8% adjusted EBITDA margin. Full-year adjusted EBITDA margin was 31.6% (second-highest in company history).
Read all positive updates
Company Guidance
ADS guided fiscal 2027 revenue of $3.35–$3.55 billion and adjusted EBITDA of $1.0–$1.05 billion (including roughly $300 million of full‑year NDS revenue), assuming significant year‑over‑year input‑material and transportation inflation that management plans to offset dollar‑for‑dollar with pricing; the company expects normal seasonality (~55% of revenue in 1H) though Q1 may be elevated by pre‑buy activity. The guide assumes roughly flat volumes with modest resilience in nonresidential and softer agriculture and single‑family housing, factors SG&A near ~14% of sales, and targets staying below 2.0x leverage (ended FY26 at ~1.6x; weighted‑average cost of debt ~5.65%; weighted‑average maturities >6 years). Management anchored the outlook to FY26 operating performance, citing Q4 adjusted EBITDA margin of 27.8% and full‑year margin of 31.6%, $569 million free cash flow (vs. $369M prior year), $819M cash from operations (~85% conversion), $250M capex, $1.4B capital deployed (≈$1.2B for growth including ~$1.0B for NDS), $155M returned to shareholders, and recent repurchase activity (720k shares in Q4 and ~ $200M repurchase executed).Advanced Drainage Systems Financial Statement Overview
Summary
Income Statement
83
Very Positive
Balance Sheet
52
Neutral
Cash Flow
79
Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.05B | 2.90B | 2.87B | 3.07B | 2.77B |
| Gross Profit | 1.11B | 1.09B | 1.15B | 1.12B | 800.38M |
| EBITDA | 900.54M | 864.55M | 910.52M | 872.43M | 558.87M |
| Net Income | 426.46M | 450.17M | 509.92M | 507.09M | 271.33M |
Balance Sheet | |||||
| Total Assets | 4.51B | 3.69B | 3.27B | 2.90B | 2.65B |
| Cash, Cash Equivalents and Short-Term Investments | 223.01M | 463.32M | 490.16M | 217.13M | 20.13M |
| Total Debt | 1.77B | 1.45B | 1.37B | 1.34B | 958.84M |
| Total Liabilities | 2.55B | 2.05B | 1.99B | 1.91B | 1.54B |
| Stockholders Equity | 1.93B | 1.62B | 1.26B | 977.37M | 1.09B |
Cash Flow | |||||
| Free Cash Flow | 569.29M | 368.55M | 534.12M | 540.90M | 125.81M |
| Operating Cash Flow | 819.05M | 581.49M | 717.93M | 707.81M | 274.89M |
| Investing Cash Flow | -1.21B | -447.87M | -155.66M | -214.48M | -198.83M |
| Financing Cash Flow | 156.32M | -157.73M | -284.34M | -296.28M | -251.07M |
Advanced Drainage Systems Technical Analysis
Negative
153.37
Price Trends
142.33
Negative
149.77
Negative
146.85
Negative
Market Momentum
-2.53
Positive
39.47
Neutral
42.13
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 153.37 is above the 20-day moving average (MA) of 138.16, above the 50-day MA of 142.33, and above the 200-day MA of 146.85, indicating a bearish trend. The MACD of -2.53 indicates Positive momentum. The RSI at 39.47 is Neutral, neither overbought nor oversold. The STOCH value of 42.13 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 28 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 2 New Risks
1.
Our results after our acquisition of NDS may suffer if we do not effectively manage our expanded operations following the acquisition or the business of NDS may underperform relative to our expectations. Q4, 2025
2.
Uncertainties associated with our acquisition of NDS may cause a loss of management personnel and other key employees, which could adversely affect our future business, operations and financial results. Q4, 2025
Advanced Drainage Systems Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $13.92B | 16.86 | -566.50% | 1.94% | -0.31% | 10.03% | |
64 Neutral | $10.39B | 24.18 | 22.43% | 0.47% | 5.03% | -5.49% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $9.70B | -18.08 | -12.50% | 2.43% | -12.20% | -333.77% | |
54 Neutral | $8.11B | 27.99 | 6.92% | ― | -8.33% | -66.48% | |
51 Neutral | $4.68B | 17.22 | 11.48% | 1.91% | -2.01% | -34.26% |
* Industrials Sector Average
WMS
Advanced Drainage Systems
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Advanced Drainage Systems Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Advanced Drainage Systems Posts Strong FY2026 Results, Dividend
Positive
May 21, 2026
Advanced Drainage Systems reported on May 21, 2026, that fourth-quarter net sales for the period ended March 31, 2026 rose 9.9% to $676.8 million, driven by strong Allied products and the contribution from its newly closed NDS acquisition, while o...
Business Operations and StrategyPrivate Placements and Financing
Advanced Drainage Systems Announces Major Refinancing and Liquidity Boost
Positive
Feb 27, 2026
On February 27, 2026, Advanced Drainage Systems issued $500 million of 5.375% senior notes due 2034, guaranteed by key domestic subsidiaries and sold to institutional and offshore investors, with proceeds earmarked to refinance its senior secured ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.