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Advanced Drainage Systems
(NYSE:WMS)
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Rating:68Neutral
Price Target:
$163.00
▲(14.92% Upside)
Action:Reiterated
Date:08/06/26
The score is driven primarily by strong profitability and cash generation, supported by an earnings update that reaffirmed guidance and showed robust Q1 results. Offsetting these positives are a meaningful balance-sheet cushion concern in the latest snapshot, mixed technical momentum (MACD slightly negative), and a valuation that looks relatively full with a low dividend yield.
Positive Factors
Cash generation
ADS converts earnings to cash at a high rate: operating cash flow materially exceeds net income (~1.6x) and free cash flow covers ~70% of profits. That durable cash conversion underpins capex, dividends, buybacks and M&A capacity, supporting long-term financial flexibility through cycles.
Negative Factors
Thin equity cushion
The most recent TTM snapshot shows equity unusually low versus debt/assets, reducing the company’s loss-absorbing buffer. That structural weakness raises sensitivity to cyclical downturns or impairment risk and constrains financial flexibility despite moderate leverage historically.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
ADS converts earnings to cash at a high rate: operating cash flow materially exceeds net income (~1.6x) and free cash flow covers ~70% of profits. That durable cash conversion underpins capex, dividends, buybacks and M&A capacity, supporting long-term financial flexibility through cycles.
Read all positive factors
Advanced Drainage Systems (WMS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.60B
Dividend Yield0.5%
Average Volume (3M)778.63K
Price to Earnings (P/E)25.6
Beta (1Y)1.20
Revenue Growth10.37%
EPS Growth4.62%
CountryUS
Employees6,425
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)5.83
Shares Outstanding75,405,340
10 Day Avg. Volume597,253
30 Day Avg. Volume778,632
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$188.38Price Target Upside32.81% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)6.38
Revenue Forecast (FY)$3.46B
Advanced Drainage Systems Business Overview & Revenue Model
Company Description
Advanced Drainage Systems, Inc., established in Hilliard, Ohio in 1966, is a leading provider of innovative water management solutions. The company specializes in the design, manufacturing, and global distribution of thermoplastic corrugated pipes...
How the Company Makes Money
Advanced Drainage Systems makes money primarily by manufacturing and selling water management products to contractors, distributors, and infrastructure-related customers. Its largest revenue stream is product sales of plastic drainage pipe—especia...
Advanced Drainage Systems Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call highlighted a very strong fiscal first quarter with record revenue, robust adjusted EBITDA and margin expansion, strong free cash flow and successful early integration of the NDS acquisition. Those positives were balanced against clear near-term headwinds from higher procured resin and transportation costs, expected sequential margin pressure in Q2–Q3, and some residential market softness. Management has pricing and recycling levers and expects to offset inflation on a full-year dollar-for-dollar basis, though timing will create short-term cadence and margin volatility.Positive Updates
Record Quarterly Revenue
First quarter revenue exceeded $1.0 billion for the first time, increasing 21% year-over-year.
Negative Updates
Inflationary Material Cost Pressure
Raw material costs were significantly higher year-over-year and are expected to peak in Q2–Q3; management expects these to be a significant headwind for the remainder of the year despite pricing actions.
Read all updates
Q1-2027 Updates
Positive
Negative
Record Quarterly Revenue
First quarter revenue exceeded $1.0 billion for the first time, increasing 21% year-over-year.
Read all positive updates
Company Guidance
Management reiterated FY27 guidance of net sales $3.350–$3.550 billion and adjusted EBITDA $1.00–$1.05 billion, while noting normal seasonality (55–60% of revenue in H1) but with Q1 including $25–$30 million of pull‑ahead; they expect pricing to offset inflationary costs dollar‑for‑dollar for the year even as resin costs peak in Q2–Q3 and transportation costs remain elevated, and warned Q2 EBITDA margin will be worse than the typical ~300 bp sequential decline from Q1. Q1 actuals included record revenue just over $1.0 billion (up 21% YoY), organic sales ex‑NDS +9% (mid‑single‑digit after adjusting for pull‑ahead), adjusted EBITDA $358 million (35.8% margin), free cash flow $203 million and NDS contribution of $95 million; liquidity and capital posture: net leverage ~1.5x (target 2x), available liquidity ~$901 million, planned FY capex ≈ $200 million, 1.5M shares repurchased in Q1, and continued focus on strategic M&A and disciplined capital returns.Advanced Drainage Systems Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
56
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.22B | 3.05B | 2.90B | 2.87B | 3.07B | 2.77B |
| Gross Profit | 1.21B | 1.11B | 1.09B | 1.15B | 1.12B | 800.38M |
| EBITDA | 926.46M | 872.49M | 864.55M | 910.52M | 872.43M | 558.87M |
| Net Income | 451.06M | 426.46M | 450.17M | 509.92M | 507.09M | 271.33M |
Balance Sheet | ||||||
| Total Assets | 4.51B | 4.51B | 3.69B | 3.27B | 2.90B | 2.65B |
| Cash, Cash Equivalents and Short-Term Investments | 162.25M | 223.01M | 463.32M | 490.16M | 217.13M | 20.13M |
| Total Debt | 1.77B | 1.79B | 1.45B | 1.37B | 1.34B | 958.84M |
| Total Liabilities | 2.62B | 2.55B | 2.05B | 1.99B | 1.91B | 1.54B |
| Stockholders Equity | 1.86B | 1.93B | 1.62B | 1.26B | 977.37M | 1.09B |
Cash Flow | ||||||
| Free Cash Flow | 550.15M | 569.29M | 368.55M | 534.12M | 540.90M | 125.81M |
| Operating Cash Flow | 804.47M | 819.05M | 581.49M | 717.93M | 707.81M | 274.89M |
| Investing Cash Flow | -1.20B | -1.21B | -447.87M | -155.66M | -214.48M | -198.83M |
| Financing Cash Flow | -81.16M | 156.32M | -157.73M | -284.34M | -296.28M | -251.07M |
Advanced Drainage Systems Technical Analysis
Positive
141.84
Price Trends
143.88
Positive
143.16
Positive
147.52
Positive
Market Momentum
>-0.01
Negative
55.60
Neutral
38.67
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 141.84 is below the 20-day moving average (MA) of 143.40, below the 50-day MA of 143.88, and below the 200-day MA of 147.52, indicating a bullish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 55.60 is Neutral, neither overbought nor oversold. The STOCH value of 38.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks
Advanced Drainage Systems Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $10.60B | 25.60 | 30.48% | 0.52% | 10.37% | 4.62% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $14.72B | 17.15 | -406.43% | 1.59% | -0.56% | 15.03% | |
60 Neutral | $12.32B | -19.15 | -17.10% | 2.15% | -11.79% | -310.77% | |
56 Neutral | $5.83B | 39.37 | 6.31% | 1.99% | -2.31% | -61.33% | |
55 Neutral | $7.79B | 79.96 | 2.46% | ― | -9.38% | -86.05% |
* Industrials Sector Average
WMS
Advanced Drainage Systems
149.23
10.62
7.66%
BLDR
Builders Firstsource
73.56
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-46.75%
FBIN
Fortune Brands Innovations
48.43
-9.22
-15.99%
MAS
Masco
74.58
2.04
2.81%
OC
Owens Corning
155.85
7.78
5.25%
Advanced Drainage Systems Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Advanced Drainage Systems Declares Dividend and Highlights Buybacks
Positive
Aug 6, 2026
Advanced Drainage Systems reported strong results for the first quarter of fiscal 2027 ended June 30, 2026, with net sales rising 20.6% to $1.0 billion and net income from continuing operations up 22.5% to $176.6 million, driven by organic growth,...
Executive/Board ChangesShareholder Meetings
Advanced Drainage Systems Holds 2026 Annual Shareholder Meeting
Positive
Jul 17, 2026
On July 16, 2026, Advanced Drainage Systems held its 2026 Annual Meeting of Stockholders via live webcast, allowing shareholders to participate and vote remotely. Stockholders elected nine directors, including D. Scott Barbour and eight other nomi...
Business Operations and Strategy
Advanced Drainage Systems Showcases Strategy at 2026 Investor Day
Positive
Jun 18, 2026
Advanced Drainage Systems, Inc., a major producer of stormwater and onsite wastewater solutions for commercial, residential, infrastructure and agricultural uses, leverages a broad manufacturing footprint, a large company-owned logistics fleet and...
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
Advanced Drainage Systems realigns segments, shifts to EBITDA
Neutral
May 21, 2026
Advanced Drainage Systems has reorganized its internal reporting structure following the acquisition of National Diversified Sales, realigning its reportable segments into Stormwater and Wastewater for the fiscal year ended March 31, 2026. The com...
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...
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.