Analyzing Advanced Drainage Systems (NYSE:WMS) and Construction Partners (NASDAQ:ROAD)

Advanced Drainage Systems (NYSE:WMS) and Construction Partners (NASDAQ:ROAD) are both construction companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Advanced Drainage Systems and Construction Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advanced Drainage Systems	0	2	8	0	2.80
Construction Partners	0	3	2	2	2.86

Advanced Drainage Systems currently has a consensus target price of $156.56, indicating a potential upside of 4.23%. Construction Partners has a consensus target price of $123.50, indicating a potential upside of 17.19%. Given Construction Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Construction Partners is more favorable than Advanced Drainage Systems.

Earnings & Valuation

This table compares Advanced Drainage Systems and Construction Partners”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advanced Drainage Systems	$2.90 billion	4.02	$450.17 million	$5.86	25.63
Construction Partners	$2.81 billion	2.10	$101.78 million	$1.83	57.58

Advanced Drainage Systems has higher revenue and earnings than Construction Partners. Advanced Drainage Systems is trading at a lower price-to-earnings ratio than Construction Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Advanced Drainage Systems and Construction Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advanced Drainage Systems	15.35%	28.85%	12.36%
Construction Partners	3.62%	14.42%	4.25%

Volatility & Risk

Advanced Drainage Systems has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Construction Partners has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Insider and Institutional Ownership

89.8% of Advanced Drainage Systems shares are held by institutional investors. Comparatively, 94.8% of Construction Partners shares are held by institutional investors. 1.6% of Advanced Drainage Systems shares are held by company insiders. Comparatively, 16.4% of Construction Partners shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Advanced Drainage Systems beats Construction Partners on 9 of the 15 factors compared between the two stocks.

About Advanced Drainage Systems

Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products in North America 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; wastewater purification through mechanical aeration wastewater for residential and commercial systems; septic tanks and accessories; combined treatment and dispersal systems, including advanced enviro-septic and advanced treatment leachfield 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. In addition, it provides PVC hubs, rubber sleeves, and stainless-steel bands. The company offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of distribution centers. Advanced Drainage Systems, Inc. incorporated in 1966 and is headquartered in Hilliard, Ohio.

About Construction Partners

Construction Partners, Inc., a civil infrastructure company, constructs and maintains roadways in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company provides various products and services to public and private infrastructure projects, such as highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; and paving activities, including the construction of roadway base layers and application of asphalt pavement. In addition, the company is involved in site development, including the installation of utility and drainage systems; mining aggregates, such as sand, gravel, and construction stones that are used as raw materials in the production of HMA; and distributing liquid asphalt cement for internal use and sales to third parties in connection with HMA production. The company was formerly known as SunTx CPI Growth Company, Inc. and changed its name to Construction Partners, Inc. in September 2017. Construction Partners, Inc. was founded in 2007 and is headquartered in Dothan, Alabama.