Advanced Drainage Systems (WMS) AI Stock Analysis

• Market Cap: $11.82B
• Dividend Yield: 0.47%
• Average Volume (3M): 511.89K
• Price to Earnings (P/E): 25.9
• Beta (1Y): 1.23
• Revenue Growth: 2.48%
• EPS Growth: -6.92%
• Country: US
• Employees: 5,705
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 1.97
• Shares Outstanding: 77,764,490
• 10 Day Avg. Volume: 469,516
• 30 Day Avg. Volume: 511,893
• PEG Ratio: -1.72
• Price to Book (P/B): 5.21
• Price to Sales (P/S): 2.90
• P/FCF Ratio: 22.86
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 4.17
• Enterprise Value/Gross Profit: 10.93
• Enterprise Value/Ebitda: 14.17
• 1Y Price Target: $181.57
• Price Target Upside: 19.42% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $170.00 ▲(11.81% Upside)

The score is driven primarily by strong financial performance (healthy margins and cash flow with improving leverage) and a positive earnings update with raised guidance. Technicals are supportive but mixed in the near term, while valuation looks relatively expensive with a low dividend yield.

Positive Factors

High profitability and margins

Sustained gross margins near 38% and net margins above 15% indicate durable pricing power, efficient production, and a favorable product mix. These margins support internal investment, debt paydown and cash returns, making earnings less vulnerable to volume cycles over months.

Robust cash generation and improving leverage

Strong operating cash conversion and double‑digit free cash flow growth enhance financial flexibility and funding for strategic investments. Combined with an improving debt profile, this reduces refinancing risk and supports sustained capital allocation over the medium term.

Acquisition expands higher‑margin product set

Closing the NDS acquisition meaningfully broadens ADS’s residential and irrigation portfolio and expands distribution reach. This structural move increases exposure to higher‑margin Allied Products and creates cross‑sell and scale benefits that can lift durable revenue mix and margin profile.

Negative Factors

Modest and inconsistent revenue growth

Low single‑digit top‑line growth highlights reliance on product mix improvements and M&A for incremental sales. Without sustained organic growth, the company may need repeated acquisitions to expand scale, which can dilute focus and introduce integration risks over the medium term.

Residential market sensitivity to rates

Material exposure to single‑family housing and residential installers links demand to interest rates and housing cycles. Prolonged rate pressure can structurally constrain new construction and retrofit demand, reducing a key revenue stream for multiple quarters to months ahead.

Rising SG&A from acquisitions and sales costs

Higher SG&A tied to recent acquisitions and elevated sales costs can compress operating leverage if revenue growth lags. Persistent elevated overhead raises break‑even requirements and increases execution risk during slower demand periods, stressing margins over the medium term.

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 States, Canada, Mexico, and internationally. The company operates through Pipe, International, Infiltrator, and Allied Products & Other segments. It offers single, double, and triple wall corrugated polypropylene and polyethylene pipes; plastic leachfield chambers and systems, EZflow synthetic aggregate bundles, mechanical aeration wastewater solutions, septic tanks and accessories, and combined treatment and dispersal systems; and allied products, including storm retention/detention and septic chambers, polyvinyl chloride drainage structures, fittings, and water quality filters and separators. The company also purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage, as well as drainage grates and other products. It offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of approximately 38 distribution centers. The company was incorporated in 1966 and is headquartered in Hilliard, Ohio.

How the Company Makes Money

Advanced Drainage Systems generates revenue primarily through the sale of its extensive range of drainage products, which are utilized in infrastructure, agriculture, and residential construction projects. The company benefits from a diversified revenue model that includes direct sales to contractors, distributors, and retail outlets. Key revenue streams include the sales of polyvinyl chloride (PVC) pipes, corrugated polyethylene pipes, and other complementary products. Additionally, Advanced Drainage Systems engages in strategic partnerships with construction firms and municipalities, allowing for bulk sales and long-term contracts that enhance its revenue stability. The company also capitalizes on trends in sustainable construction and environmental regulations promoting efficient water management, further contributing to its earnings.

Advanced Drainage Systems Financial Statement Overview

Summary

Strong profitability (gross margin ~38%, net margin >15% TTM) and robust cash generation (OCF to net income 1.54; FCF growth 13.76% TTM). Balance sheet is improving with lower leverage (debt-to-equity 0.75) and high ROE (26.83%), though revenue growth is modest and has been inconsistent.

Income Statement

Advanced Drainage Systems shows strong profitability with a consistent gross profit margin around 38% and a net profit margin above 15% in the TTM. Revenue growth is modest at 2.32% in the TTM, indicating stable but slow growth. The EBIT and EBITDA margins are healthy, reflecting efficient operations. However, the revenue growth rate has fluctuated in recent years, which could be a concern for sustained growth.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.75 in the TTM, indicating a better leverage position compared to previous years. Return on equity remains strong at 26.83%, showcasing effective use of equity to generate profits. The equity ratio is stable, suggesting a balanced asset structure. However, past high leverage levels pose a potential risk if not managed carefully.

Cash Flow

Cash flow performance is robust, with a significant free cash flow growth rate of 13.76% in the TTM. The operating cash flow to net income ratio is strong at 1.54, indicating good cash generation relative to net income. The free cash flow to net income ratio is also healthy, reflecting efficient cash management. Despite past fluctuations, current cash flow metrics are favorable.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.99B	2.90B	2.87B	3.07B	2.77B	1.98B
Gross Profit	1.14B	1.09B	1.15B	1.12B	800.38M	690.08M
EBITDA	877.71M	864.55M	910.52M	872.43M	558.87M	493.51M
Net Income	458.33M	450.17M	509.92M	507.09M	271.33M	224.23M
Balance Sheet
Total Assets	4.08B	3.69B	3.27B	2.90B	2.65B	2.41B
Cash, Cash Equivalents and Short-Term Investments	812.86M	463.32M	490.16M	217.13M	20.13M	195.01M
Total Debt	1.43B	1.45B	1.37B	1.34B	958.84M	850.50M
Total Liabilities	2.15B	2.05B	1.99B	1.91B	1.54B	1.35B
Stockholders Equity	1.91B	1.62B	1.26B	977.37M	1.09B	1.05B
Cash Flow
Free Cash Flow	529.23M	368.55M	534.12M	540.90M	125.81M	373.46M
Operating Cash Flow	741.01M	581.49M	717.93M	707.81M	274.89M	452.22M
Investing Cash Flow	-441.67M	-447.87M	-155.66M	-214.48M	-198.83M	-77.87M
Financing Cash Flow	-98.94M	-157.73M	-284.34M	-296.28M	-251.07M	-354.58M

Advanced Drainage Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 152.04
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMS, the sentiment is Positive. The current price of 152.04 is below the 20-day moving average (MA) of 154.54, above the 50-day MA of 151.00, and above the 200-day MA of 133.32, indicating a bullish trend. The MACD of 0.99 indicates Positive momentum. The RSI at 56.77 is Neutral, neither overbought nor oversold. The STOCH value of 34.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WMS.

Advanced Drainage Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMS	74 Outperform	$11.82B	25.94	27.09%	0.47%	2.48%	-6.92%
FBIN	67 Neutral	$6.50B	20.21	13.72%	1.91%	-3.78%	-24.77%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BLDR	63 Neutral	$12.65B	21.56	13.56%	―	-6.44%	-48.84%
MAS	53 Neutral	$13.73B	16.93	―	1.94%	-3.62%	3.41%
OC	52 Neutral	$9.85B	-21.13	-3.27%	2.43%	3.47%	-148.53%

Advanced Drainage Systems Corporate Events

Advanced Drainage Systems Completes Acquisition of NDS Business

On February 2, 2026, Advanced Drainage Systems completed its previously announced all-cash acquisition of National Diversified Sales, the water management business of Germany’s NORMA Group SE, for approximately $1.0 billion, subject to customary purchase price adjustments. The deal brings NDS’ residential water management, access box and irrigation solutions into ADS’s portfolio, broadening its reach across the water value chain and reinforcing its position as an end-to-end water solutions provider. Management said the transaction advances ADS’s core growth strategy by strengthening its higher-margin Allied Products offering, expanding distribution and customer reach, and further diversifying the business in attractive, growing end markets, with advisors Centerview Partners, Jefferies and several law firms supporting the transaction.

The most recent analyst rating on (WMS) stock is a Buy with a $180.00 price target. To see the full list of analyst forecasts on Advanced Drainage Systems stock, see the WMS Stock Forecast page.

Advanced Drainage Systems Reports Strong Q2 2026 Results

On November 6, 2025, Advanced Drainage Systems announced its second quarter fiscal 2026 results, highlighting a net sales increase of 8.7% to $850.4 million and a net income rise of 19.3% to $156.5 million. The company attributed its strong performance to strategic sales initiatives, acquisitions, and a favorable product mix, despite a challenging macroeconomic environment. Additionally, ADS announced a cash dividend of $0.18 per share and an acquisition of NDS, which is expected to enhance its product offerings and market reach.

The most recent analyst rating on (WMS) stock is a Buy with a $159.00 price target. To see the full list of analyst forecasts on Advanced Drainage Systems stock, see the WMS Stock Forecast page.