Advanced Drainage Systems (NYSE:WMS) Posts Earnings Results

Advanced Drainage Systems (NYSE:WMS) announced its quarterly earnings results on Thursday. The construction company reported $2.49 earnings per share (EPS) for the quarter, beating the consensus estimate of $2.10 by $0.39, Zacks reports. The firm had revenue of $1 billion during the quarter, compared to the consensus estimate of $991.39 million. Advanced Drainage Systems had a net margin of 13.98% and a return on equity of 26.63%. The firm’s quarterly revenue was up 20.6% on a year-over-year basis. During the same period last year, the firm posted $1.95 EPS.

Here are the key takeaways from Advanced Drainage Systems’ conference call:

• Strong first-quarter results: Revenue surpassed $1 billion, up 21% year over year, while organic sales rose 9% and adjusted EBITDA increased 29% to $358 million, producing a 35.8% margin.
• Diversification supported outperformance: Non-residential sales grew 14% organically, wastewater revenue increased 8%, and stormwater storage products rose 18%, helping offset weakness in residential construction and retail.
• NDS integration is progressing: NDS generated $95 million of revenue in the quarter and performed strongly, although management said meaningful cross-selling synergies are still ahead and cautioned that the first quarter is typically its strongest.
• Near-term margin pressure is expected: Approximately $25 million-$30 million of revenue was pulled into the first quarter ahead of price increases, while higher resin and transportation costs are expected to weigh more heavily in the second and third quarters, causing sequential margin compression beyond the normal 300 basis points.
• Guidance and financial flexibility were maintained: Full-year revenue guidance remains $3.35 billion-$3.55 billion and adjusted EBITDA guidance remains $1.0 billion-$1.05 billion; free cash flow was $203 million, net leverage was approximately 1.5 times, and the company repurchased about $250 million of shares and dividends in the quarter.

Advanced Drainage Systems Trading Down 2.8%

Advanced Drainage Systems stock traded down $4.17 during trading hours on Friday, reaching $144.28. 825,757 shares of the company’s stock traded hands, compared to its average volume of 854,527. The company has a debt-to-equity ratio of 0.92, a quick ratio of 1.35 and a current ratio of 2.42. Advanced Drainage Systems has a fifty-two week low of $128.03 and a fifty-two week high of $179.32. The firm has a market capitalization of $11.06 billion, a price-to-earnings ratio of 26.52, a PEG ratio of 1.61 and a beta of 1.27. The firm’s 50 day moving average is $143.75 and its 200-day moving average is $147.99.

Advanced Drainage Systems Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Tuesday, September 15th. Shareholders of record on Tuesday, September 1st will be issued a dividend of $0.20 per share. This represents a $0.80 annualized dividend and a yield of 0.6%. The ex-dividend date of this dividend is Tuesday, September 1st. Advanced Drainage Systems’s payout ratio is currently 14.71%.

Wall Street Analysts Forecast Growth

A number of research analysts recently issued reports on the company. UBS Group reaffirmed a “buy” rating and issued a $207.00 price target on shares of Advanced Drainage Systems in a report on Friday. Royal Bank Of Canada increased their price objective on shares of Advanced Drainage Systems from $170.00 to $178.00 and gave the stock an “outperform” rating in a report on Friday. KeyCorp restated an “overweight” rating on shares of Advanced Drainage Systems in a research report on Monday, June 22nd. Weiss Ratings reaffirmed a “hold (c)” rating on shares of Advanced Drainage Systems in a research note on Friday, July 17th. Finally, Barclays upped their target price on shares of Advanced Drainage Systems from $181.00 to $191.00 and gave the stock an “overweight” rating in a research report on Tuesday, July 14th. Seven equities research analysts have rated the stock with a Buy rating and two have given a Hold rating to the company. Based on data from MarketBeat.com, the company presently has an average rating of “Moderate Buy” and a consensus price target of $188.38.

Key Headlines Impacting Advanced Drainage Systems

Here are the key news stories impacting Advanced Drainage Systems this week:

• Positive Sentiment: Results exceeded expectations: Fiscal Q1 2027 EPS was $2.49, above the $2.10-$2.19 analyst estimates and up from $1.95 a year earlier. Revenue reached approximately $1.0 billion, beating the $991.4 million consensus estimate and increasing 20.6% year over year. Advanced Drainage Systems Announces First Quarter Fiscal 2027 Results
• Positive Sentiment: Dividend increased: The board approved a quarterly dividend of $0.20 per share, an 11% increase from the prior year. The dividend is payable September 15 to shareholders of record September 1. Advanced Drainage Systems Announces Quarterly Cash Dividend
• Neutral Sentiment: Fiscal 2027 outlook was broadly in line: Management forecast revenue of $3.4 billion to $3.6 billion, surrounding the roughly $3.5 billion consensus estimate. The range does not represent a clear upward revision that would materially improve investor expectations. Advanced Drainage Systems Q1 Earnings and Revenues Top Estimates
• Negative Sentiment: Cost pressures cloud the outlook: Commentary highlighted inflation and recycling-market factors that could pressure margins or limit the benefit of strong demand, causing investors to focus on forward profitability rather than the quarterly beat. WMS Q2 Deep Dive
• Negative Sentiment: Valuation may limit upside: At roughly 26.5 times earnings and a 1.61 PEG ratio, WMS is not an obvious deep-value stock. A comparison with Gibraltar Industries (ROCK) may encourage valuation-sensitive investors to favor the alternative. ROCK or WMS: Which Is the Better Value Stock Right Now?

Hedge Funds Weigh In On Advanced Drainage Systems

Large investors have recently bought and sold shares of the business. Northwestern Mutual Wealth Management Co. grew its holdings in Advanced Drainage Systems by 352.0% during the 2nd quarter. Northwestern Mutual Wealth Management Co. now owns 226 shares of the construction company’s stock worth $26,000 after acquiring an additional 176 shares during the period. Baird Financial Group Inc. boosted its position in shares of Advanced Drainage Systems by 1.8% in the 2nd quarter. Baird Financial Group Inc. now owns 21,049 shares of the construction company’s stock worth $2,418,000 after purchasing an additional 382 shares during the last quarter. Brown Advisory Inc. grew its stake in shares of Advanced Drainage Systems by 14.0% during the second quarter. Brown Advisory Inc. now owns 4,784 shares of the construction company’s stock worth $549,000 after purchasing an additional 588 shares during the period. Jump Financial LLC acquired a new stake in shares of Advanced Drainage Systems during the second quarter worth $403,000. Finally, California Public Employees Retirement System increased its holdings in Advanced Drainage Systems by 2.2% in the second quarter. California Public Employees Retirement System now owns 101,512 shares of the construction company’s stock valued at $11,660,000 after purchasing an additional 2,206 shares during the last quarter. 89.83% of the stock is currently owned by institutional investors and hedge funds.

About Advanced Drainage Systems

Advanced Drainage Systems, Inc (NYSE: WMS) is a leading manufacturer and supplier of water management solutions in North America. Headquartered in Hilliard, Ohio, the company specializes in the design, production and distribution of high-density polyethylene (HDPE) drainage pipe and related products. Its core business addresses stormwater management, on-site septic systems and erosion control for residential, commercial and infrastructure projects.

The company’s product portfolio includes corrugated plastic pipe, tubing, fittings, geocells, geogrids and stormwater structures such as inlets, manholes and detention/retention systems.