Advanced Drainage Systems, Inc. (WMS) stock analysis

P/E above its 5-year median

Advanced Drainage Systems's P/E of 24.6 is above its own 5-year median of 24.6.

P/E below the industry

Advanced Drainage Systems's P/E of 24.6 is below the Miscellaneous Plastics Products median of 30.9.

EV/EBITDA above its 5-year median

Advanced Drainage Systems's EV/EBITDA of 12.8 is above its 5-year median of 12.8.

P/B above the industry

Advanced Drainage Systems's price-to-book of 5.55 is above the Miscellaneous Plastics Products median of 3.56.

Trading above fair value

The share price of $129.30 is above our fair value estimate of $124.97.

Margin of safety under 20%

The price is 3.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -0.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -3.6% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -11.5% over the last twelve months, against a 5-year average of 13.7% a year.

Growing slower than the industry

Revenue grew 9.2% over the last twelve months; the Miscellaneous Plastics Products median is 9.2%.

Guidance raised

Advanced Drainage Systems raised its fiscal 2026 Adjusted EBITDA outlook on Feb 5, 2026.

Gross margin improving

Gross margin was 38.4% over the last twelve months, against 38.1% a year earlier.

Return on equity over 15%

Return on equity was 22.6% over the last twelve months and averaged 40.2% over five years.

Return on capital over 10%

Return on invested capital was 17.8%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Advanced Drainage Systems's return on equity of 22.6% is above the Miscellaneous Plastics Products median of 7.1%.

Earnings grew over 5 years

Net income grew 13.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 12.4% over the last twelve months, against a 5-year average of 14.7%.

Net margin above the industry

Advanced Drainage Systems's net margin of 12.4% is above the Miscellaneous Plastics Products median of 5.0%.

High debt

Debt is 91.8% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 96.3% five years ago to 91.8%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 47.6% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 2.13 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.27; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Advanced Drainage Systems paid dividends worth 0.6% of the share price over the last twelve months.

Yield below Treasuries

The 0.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Advanced Drainage Systems yields 0.6%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 14.4% of net income.

Covered by free cash flow

Dividends take 11.0% of free cash flow.