Head to Head Review: Advanced Drainage Systems (NYSE:WMS) vs. Armstrong World Industries (NYSE:AWI)

Armstrong World Industries (NYSE:AWI) and Advanced Drainage Systems (NYSE:WMS) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Risk and Volatility

Armstrong World Industries has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Advanced Drainage Systems has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.

Insider & Institutional Ownership

98.9% of Armstrong World Industries shares are owned by institutional investors. Comparatively, 89.8% of Advanced Drainage Systems shares are owned by institutional investors. 1.2% of Armstrong World Industries shares are owned by insiders. Comparatively, 1.7% of Advanced Drainage Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Armstrong World Industries and Advanced Drainage Systems”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Armstrong World Industries	$1.62 billion	4.40	$308.70 million	$7.49	22.77
Advanced Drainage Systems	$3.22 billion	2.89	$426.46 million	$5.79	21.29

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

Profitability

This table compares Armstrong World Industries and Advanced Drainage Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Armstrong World Industries	18.38%	38.06%	17.16%
Advanced Drainage Systems	14.00%	28.28%	12.30%

Dividends

Armstrong World Industries pays an annual dividend of $1.36 per share and has a dividend yield of 0.8%. Advanced Drainage Systems pays an annual dividend of $0.80 per share and has a dividend yield of 0.6%. Armstrong World Industries pays out 18.2% of its earnings in the form of a dividend. Advanced Drainage Systems pays out 13.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Armstrong World Industries has raised its dividend for 1 consecutive years and Advanced Drainage Systems has raised its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Armstrong World Industries and Advanced Drainage Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Armstrong World Industries	0	2	7	0	2.78
Advanced Drainage Systems	0	2	8	0	2.80

Armstrong World Industries currently has a consensus target price of $203.12, suggesting a potential upside of 19.10%. Advanced Drainage Systems has a consensus target price of $187.40, suggesting a potential upside of 51.99%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Advanced Drainage Systems is more favorable than Armstrong World Industries.

About Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.

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.