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Advanced Drainage Systems (WMS)
NYSE:WMS
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Advanced Drainage Systems
(NYSE:WMS)72Outperform
Positive Factors
Market Expansion Opportunities
The increasing recurrence of storm events is driving adoption of more resilient stormwater management infrastructure, providing further share opportunity for ADS.
Strategic Acquisitions
ADS announced its agreement to acquire Orenco Systems, a leading manufacturer of advanced onsite septic wastewater treatment products.
Negative Factors
Guidance and Market Conditions
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. S&P 500 (SPY)
Market Cap
$8.64B
Dividend Yield0.56%
Average Volume (3M)651.61K
Price to Earnings (P/E)18.6
Beta (1Y)1.59
Revenue Growth3.67%
EPS Growth-5.03%
CountryUS
Employees5,705
SectorIndustrials
Sector Strength66
IndustryConstruction
Share Statistics
EPS (TTM)5.98
Shares Outstanding77,574,660
10 Day Avg. Volume583,669
30 Day Avg. Volume651,611
Financial Highlights & Ratios
PEG Ratio3.44
Price to Book (P/B)N/A
Price to Sales (P/S)2.99
Price to Cash Flow (P/CF)11.60
P/FCF Ratio11.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$149.40Price Target Upside30.06% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Advanced Drainage Systems Business Overview & Revenue Model
Company DescriptionAdvanced Drainage Systems, Inc. (WMS) is a leading manufacturer of innovative stormwater management and drainage solutions. The company operates in the water management infrastructure sector, providing an extensive range of products, including high-performance thermoplastic corrugated pipes, fittings, and water management solutions. Their offerings cater to a variety of sectors, such as agriculture, residential, commercial, and infrastructure development, primarily focusing on sustainable and efficient water management systems.
How the Company Makes MoneyAdvanced Drainage Systems generates revenue through the sale of its comprehensive range of water management products and solutions. The company primarily earns money from its core product lines, which include corrugated high-density polyethylene (HDPE) pipes, polypropylene pipes, and related fittings and accessories. These products are essential for effective stormwater management, wastewater management, and drainage applications. The company also provides various water management solutions that enhance its product offerings, such as stormwater treatment units and water storage systems. Key revenue streams include sales to construction and infrastructure development projects, agricultural sectors, and residential markets. Additionally, Advanced Drainage Systems benefits from strategic partnerships with distributors and contractors, facilitating broader market reach and increased sales opportunities. Factors such as increasing regulations on water management and the growing need for sustainable infrastructure solutions further contribute to the company's financial performance.
Advanced Drainage Systems Financial Statement Overview
Summary
Advanced Drainage Systems exhibits strong financial health with high income statement metrics and reasonable cash flow performance. The balance sheet reveals high leverage, but operational and financial management are effective, indicating solid positioning in the construction industry.Income Statement
Advanced Drainage Systems has shown strong financial performance with a high gross profit margin and consistent net profit margins over the years. Revenue growth is stable, indicating a positive trend in income. The company also maintains healthy EBIT and EBITDA margins, showcasing efficient operational management.85
Very Positive
Balance Sheet
The balance sheet reflects moderate financial stability. The debt-to-equity ratio is relatively high, indicating significant leverage, but the company has managed to maintain a reasonable return on equity. The equity ratio suggests a balanced approach to financing through debt and equity, though there is room for improvement in reducing debt levels.70
Positive
Cash Flow
Cash flow analysis shows satisfactory performance with a stable operating cash flow to net income ratio. Free cash flow growth has been inconsistent, but overall, the cash flow generation aligns well with net income, indicating efficient cash utilization. However, greater consistency in free cash flow growth is desirable.75
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.94B | 2.87B | 3.07B | 2.77B | 1.98B | 1.67B | Gross Profit |
| 1.09B | 1.15B | 1.12B | 800.38M | 690.08M | 316.48M | EBIT |
| 678.43M | 732.13M | 719.31M | 411.92M | 344.52M | -90.01M | EBITDA |
| 866.74M | 907.39M | 868.46M | 554.55M | 493.51M | 28.04M | Net Income Common Stockholders |
| 467.84M | 509.92M | 507.09M | 271.33M | 224.23M | -193.71M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 488.86M | 490.16M | 217.13M | 20.13M | 195.01M | 174.23M | Total Assets |
| 3.60B | 3.27B | 2.90B | 2.65B | 2.41B | 2.37B | Total Debt |
| 1.41B | 1.41B | 1.32B | 944.64M | 841.50M | 1.16B | Net Debt |
| 920.76M | 915.69M | 1.11B | 924.51M | 646.49M | 987.97M | Total Liabilities |
| 2.04B | 1.99B | 1.91B | 1.54B | 1.35B | 1.59B | Stockholders Equity |
| 1.55B | 1.26B | 977.37M | 1.09B | 1.05B | 772.82M |
| Cash Flow | Free Cash Flow | ||||
| 344.09M | 534.12M | 540.90M | 125.81M | 373.46M | 238.51M | Operating Cash Flow |
| 557.93M | 717.93M | 707.81M | 274.89M | 452.22M | 306.19M | Investing Cash Flow |
| -442.67M | -155.66M | -214.48M | -198.83M | -77.87M | -1.15B | Financing Cash Flow |
| -183.85M | -284.34M | -296.28M | -251.07M | -354.58M | 1.01B |
Advanced Drainage Systems Technical Analysis
Negative
114.87
Price Trends
118.44
Negative
128.60
Negative
143.84
Negative
Market Momentum
-2.74
Positive
46.58
Neutral
72.86
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 114.87 is below the 20-day moving average (MA) of 117.48, below the 50-day MA of 118.44, and below the 200-day MA of 143.84, indicating a bearish trend. The MACD of -2.74 indicates Positive momentum. The RSI at 46.58 is Neutral, neither overbought nor oversold. The STOCH value of 72.86 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $6.80B | 19.72 | 24.05% | 0.71% | -2.38% | 141.60% | |
78 Outperform | $6.63B | 25.34 | 39.28% | 0.75% | 11.62% | 20.76% | |
72 Outperform | $8.64B | 18.63 | 34.07% | 0.56% | 3.67% | -5.03% | |
71 Outperform | $12.45B | 19.76 | 12.63% | 1.71% | 13.41% | -44.36% | |
65 Neutral | $6.29B | 27.60 | 28.90% | ― | 5.17% | 10.39% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
60 Neutral | $15.60B | 19.60 | -118.61% | 1.59% | -1.74% | -6.91% |
* Industrials Sector Average
Performance Comparison
WMS
Advanced Drainage Systems
114.87
-44.89
-28.10%
AWI
Armstrong World
149.52
29.91
25.01%
MAS
Masco
75.20
1.21
1.64%
OC
Owens Corning
144.58
-9.77
-6.33%
TREX
Trex Company
56.19
-37.70
-40.15%
VMI
Valmont
327.97
113.80
53.14%
Advanced Drainage Systems Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -0.84% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative elements. On the positive side, the company experienced growth in net sales and strong performance in the residential and non-residential markets. The acquisition of Orenco was a notable contributor to sales. However, the decrease in adjusted EBITDA, infrastructure market decline, and increased capital spending are significant challenges. The sentiment is neutral as the highlights and lowlights appear to be balanced.Highlights
Increase in Net Sales
Net sales increased by 4% to $691 million, including the acquisition of Orenco.
Residential Market Growth
Sales in the residential market, which are about 35% of total revenue, increased by 9%.
Non-Residential Market Performance
Sales in the non-residential market increased by 7% as demand improved, which is about 45% of total sales.
Expansion in Georgia
Broke ground on an expansion of the ADS recycling facility in Cordele, Georgia, to increase recycling capacity.
Orenco Acquisition Contribution
Orenco contributed $25 million of sales in the period, slightly ahead of expectations.
Positive Outlook for Infrastructure
Despite a decline, the infrastructure market is positioned well with favorable long-term indicators.
Lowlights
Decrease in Adjusted EBITDA
Adjusted EBITDA decreased by 6% year-over-year to $191 million.
Infrastructure Market Decline
Sales in the infrastructure market were down 6% in the quarter on a difficult comparison.
Free Cash Flow Decline
Generated $374 million of free cash flow year-to-date compared to $564 million in the prior year.
Increased Capital Spending
Year-to-date capital spending increased 22% year-over-year to $166 million.
Company Guidance
During Advanced Drainage Systems' third-quarter fiscal year 2025 conference call, the company reported a 4% increase in net sales to $691 million, with the acquisition of Orenco contributing $25 million. Sales in the non-residential market, accounting for 45% of total sales, rose by 7%, while residential market sales increased by 9%, making up 35% of total revenue. The infrastructure market saw a 6% decline compared to a 22% increase the previous year. Adjusted EBITDA was down 6% year-over-year to $191 million. Year-to-date free cash flow was $374 million, with capital spending up by 22% to $166 million. The company's guidance for fiscal 2025 revenue and adjusted EBITDA remains unchanged, with a focus on continued growth and strategic investments, including an expansion of their recycling facility in Cordele, Georgia.Advanced Drainage Systems Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Advanced Drainage Systems Reports Q3 2024 Financial Results
Neutral
Feb 6, 2025
On February 6, 2025, Advanced Drainage Systems announced its fiscal third quarter results for the period ending December 31, 2024. The company’s net sales increased by 4.3% to $690.5 million, driven by demand in construction markets despite a decrease in domestic pipe sales. However, net income decreased by 23% to $82.3 million, impacted by unfavorable pricing and material costs. The acquisition of Orenco Systems expanded ADS’s offering in decentralized wastewater management, contributing to sales growth. With increasing concerns about stormwater infrastructure, ADS is focused on growing its leadership in water management solutions while expanding capacity and investing in sustainable growth.
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.