Advanced Drainage Systems (WMS) AI Stock Analysis

• Market Cap: $13.24B
• Dividend Yield: 0.47%
• Average Volume (3M): 697.85K
• Price to Earnings (P/E): 28.3
• Beta (1Y): 1.17
• Revenue Growth: 2.48%
• EPS Growth: -6.92%
• Country: US
• Employees: 5,705
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 1.27
• Shares Outstanding: 77,895,584
• 10 Day Avg. Volume: 620,793
• 30 Day Avg. Volume: 697,847
• 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: 1.02
• Enterprise Value/Revenue: 4.54
• Enterprise Value/Gross Profit: 11.87
• Enterprise Value/Ebitda: 15.15
• 1Y Price Target: $203.50
• Price Target Upside: 20.79% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $194.00 ▲(15.15% Upside)
• Action: Reiterated Date: 02/13/26
• Date: Action: Reiterated 02/13/26

The score is driven primarily by solid financial performance (strong profitability and cash generation) and a constructive earnings update with raised guidance and margin outlook. Technicals support the trend but show overbought conditions, while valuation (higher P/E and low yield) and leverage-related risk factors temper the overall score.

Positive Factors

Cash generation & liquidity

Consistent, high operating and free cash flow provides durable internal funding for capex, bolt-on M&A, and shareholder returns. Strong cash conversion supports refinancing flexibility and allows the company to sustain investment through cyclical construction demand and weather-driven variability.

High profitability & margin expansion

Elevated gross and net margins, plus guidance for adjusted EBITDA margin expansion, reflect durable mix shift to higher-margin allied products and operational improvements. These margin dynamics underpin sustainable cash generation and resiliency versus lower‑margin commodity segments.

Strategic M&A & portfolio diversification

The NDS acquisition broadens residential stormwater/irrigation offerings and retail distribution, creating three complementary brands. This structural diversification improves end‑market exposure, supports cross‑sell, and strengthens long‑term growth prospects beyond core pipe volumes.

Negative Factors

Elevated leverage and refinancing activity

Sizeable debt and volatile leverage raise structural refinancing and interest‑service risk. Management plans market access and has active liability management, but upcoming maturities and additional term loan issuance mean capital markets execution and interest cost variability remain ongoing balance‑sheet risks.

Residential/DIY end-market weakness

Persistent weakness in residential and DIY channels strains single‑wall pipe and retail-facing product volumes, creating durable headwinds for those subsegments. Structural softness can limit organic growth, increase volatility, and pressure margins where exposure to retail and ag markets is material.

Integration margin drag & synergy timing (NDS)

NDS brings lower initial margins and near‑term integration costs, creating a temporary dilution of company margins. Realizing announced cost synergies will take multiple years, leaving execution risk that could delay margin normalization and compress near‑term adjusted EBITDA conversion.

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 and cash generation (TTM revenue +9.4%, ~38.7% gross margin, ~15.7% net margin; TTM OCF $820M and FCF $577M). Offsets are balance-sheet risk signals (sizeable $1.45B debt and volatile/elevated leverage metrics) and some margin normalization versus the prior peak.

Income Statement

TTM (Trailing-Twelve-Months) revenue rose 9.4%, and profitability remains strong with ~38.7% gross margin and ~15.7% net margin. However, margins are below the prior annual peak (2024), suggesting some normalization/pressure even as top-line growth re-accelerates versus the low-growth 2025 annual period.

Balance Sheet

Returns on equity are strong (TTM ~35%), supporting a high-quality earnings profile. That said, leverage looks elevated and volatile: total debt is sizeable ($1.45B) and the reported debt-to-equity spikes in TTM, which increases financial risk despite a higher equity base versus prior years.

Cash Flow

Cash generation is solid: TTM operating cash flow is $820M and free cash flow is $577M, with operating cash flow running at ~2.0x the level needed to cover reported earnings. A key watch item is that free cash flow is ~70% of net income in TTM (good, but not full conversion), and free cash flow growth has been uneven across years.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 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	895.13M	864.55M	910.52M	872.43M	558.87M	493.51M
Net Income	470.72M	450.17M	509.92M	507.09M	271.33M	224.23M
Balance Sheet
Total Assets	4.14B	3.69B	3.27B	2.90B	2.65B	2.41B
Cash, Cash Equivalents and Short-Term Investments	1.01B	463.32M	490.16M	217.13M	20.13M	195.01M
Total Debt	1.45B	1.45B	1.37B	1.34B	958.84M	850.50M
Total Liabilities	2.12B	2.05B	1.99B	1.91B	1.54B	1.35B
Stockholders Equity	2.01B	1.62B	1.26B	977.37M	1.09B	1.05B
Cash Flow
Free Cash Flow	577.09M	368.55M	534.12M	540.90M	125.81M	373.46M
Operating Cash Flow	820.36M	581.49M	717.93M	707.81M	274.89M	452.22M
Investing Cash Flow	-231.55M	-447.87M	-155.66M	-214.48M	-198.83M	-77.87M
Financing Cash Flow	-74.43M	-157.73M	-284.34M	-296.28M	-251.07M	-354.58M

Advanced Drainage Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 168.47
• 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 168.47 is above the 20-day moving average (MA) of 164.64, above the 50-day MA of 156.75, and above the 200-day MA of 137.52, indicating a bullish trend. The MACD of 4.40 indicates Positive momentum. The RSI at 57.72 is Neutral, neither overbought nor oversold. The STOCH value of 28.29 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	75 Outperform	$13.24B	28.25	26.50%	0.47%	2.48%	-6.92%
MAS	64 Neutral	$15.62B	19.89	―	1.94%	-3.62%	3.41%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BLDR	52 Neutral	$12.60B	28.62	10.06%	―	-6.44%	-48.84%
OC	52 Neutral	$11.04B	-22.77	-3.27%	2.43%	3.47%	-148.53%
FBIN	51 Neutral	$6.47B	21.84	12.43%	1.91%	-3.78%	-24.77%

Advanced Drainage Systems Corporate Events

Advanced Drainage Systems Announces New Notes Offering, Refinancing

On February 12, 2026, Advanced Drainage Systems announced it had priced a $500 million private offering of 5.375% senior unsecured notes due 2034, guaranteed by certain domestic subsidiaries, with closing expected on February 27, 2026, subject to customary conditions. In connection with the new notes, the company plans to amend its senior secured credit facility by expanding its revolving line to $750 million, increasing its term loan B to $600 million and extending maturities, although completion of the amended facility is not a condition to closing the notes deal.

ADS intends to use the net proceeds from the 2034 notes, together with borrowings under the expanded term loan B, to refinance its existing senior secured credit facility and redeem all of its outstanding 5.000% senior notes due 2027, with any remainder earmarked for general corporate purposes. Also on February 12, 2026, the company exercised its optional redemption rights for the $350 million 2027 notes, setting February 27, 2026 as the conditional redemption date, signaling an active liability‑management strategy that extends its debt maturity profile and potentially strengthens its capital structure for future growth.

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.

Advanced Drainage Systems Announces Major Debt Refinancing Plan

On February 12, 2026, Advanced Drainage Systems announced plans to launch a private offering of up to $500 million in senior unsecured notes due 2034, with the notes guaranteed by its domestic subsidiaries that back its senior secured credit facility. In tandem, the company expects to amend its credit facility by expanding its revolving line to $750 million, increasing its term loan B to $600 million and extending its maturity, though completion of these changes remains subject to customary closing conditions.

ADS plans to use proceeds from the notes and the upsized term loan to refinance its existing senior secured credit facility and redeem its outstanding 5.000% senior notes due 2027, with any remaining funds earmarked for general corporate purposes. The planned refinancing would extend the company’s debt maturities and enlarge its available liquidity, potentially strengthening its balance sheet flexibility and supporting continued investment in growth across its core water management markets.

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.

Advanced Drainage Systems Boosts Buybacks After Strong Quarter

On February 5, 2026, Advanced Drainage Systems reported fiscal third-quarter 2026 results for the period ended December 31, 2025, highlighting modest net sales growth of 0.4% to $693.4 million but significantly higher profitability, with net income up 14.3% to $94.0 million and adjusted EBITDA rising 9.3% to $209.2 million, driven by a shift toward higher-margin allied products and Infiltrator offerings and favorable price/cost dynamics. Year-to-date, net sales grew 3.7% to $2.37 billion and adjusted EBITDA climbed 8.8% to $774.9 million, while strong cash generation reduced net debt and left the company with $1.6 billion of liquidity and a leverage ratio of 0.5 times. ADS also closed the acquisition of National Diversified Sales on February 2, 2026, broadening its residential stormwater and irrigation product portfolio and strengthening its presence in distribution and retail channels, and on the same day it announced a $1 billion increase in its stock repurchase authorization to a total of $1.148 billion and declared a cash dividend of $0.18 per share, payable March 16, 2026, underscoring an aggressive capital-return strategy that reinforces its positioning in water infrastructure while rewarding shareholders despite a mixed macroeconomic demand environment.

The most recent analyst rating on (WMS) stock is a Hold with a $166.00 price target. To see the full list of analyst forecasts on Advanced Drainage Systems stock, see the WMS Stock Forecast page.

Advanced Drainage Systems 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.