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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on WMS

Advanced Drainage Systems' recent performance was driven by strong Q3 earnings and revenue beat, outperforming the S&P 500 with a solid stock gain since September 2025. The company's acquisition of National Diversified Sales for $875M adds $313M revenue and expected $25M synergies within three years. Additionally, Advanced Drainage has an impressive earnings surprise history and possesses the right combination of key ingredients for a likely earnings beat in its next quarterly report. The company's executives reported strong results in its fiscal third quarter of 2026, citing continued momentum in higher-growth product categories and benefits from cost and operational improvement initiatives.

1.c. Company Highlights

2. Strong Q3 Earnings Reflect Operational Excellence

The company's third-quarter results showcased a robust performance, with adjusted EBITDA increasing 9% despite a flat revenue base, resulting in a 250 basis point increase in the adjusted EBITDA margin to 30.2%. This translated to one of the most profitable third quarters in the company's history. Earnings per share (EPS) came in at $1.27, beating estimates of $1.11. Revenue remained stable, and the company demonstrated its ability to maintain profitability in a challenging market environment.

Publication Date: Feb -17

📋 Highlights
  • Adjusted EBITDA Margin Growth:: Achieved 30.2% adjusted EBITDA margin, up 250 basis points year-over-year despite flat revenue.
  • Strong Cash Flow Performance:: Cash flow from operations surged 44% YoY to $239 million, converting over 100% of adjusted EBITDA into cash.
  • NDS Acquisition Impact:: Added $40 million in revenue with a 20% EBITDA margin, enhancing stormwater and wastewater management offerings.
  • 2026 Guidance Update:: Targets $3.015 billion revenue and $945 million adjusted EBITDA, with 31.1-31.6% EBITDA margin.
  • Capital Allocation Strategy:: 70% of capital deployed from 2020-2026 allocated to growth via acquisitions and capex, including $1 billion stock repurchase authorization.

Operational Highlights

The company's strategic priorities, including driving market share, introducing new products, distribution, and customer programs, continue to drive growth. The infiltrator business, Allied Products portfolio, and HP pipe sales outperformed the market, contributing to the strong profitability. The recent acquisition of NDS is expected to enhance the company's offering in both distribution and retail channels, with $40 million of revenue at an approximate 20% EBITDA margin.

Cash Flow and Capital Allocation

Cash flow from operations increased $239 million or 44% year over year, driven by effective working capital management, increased profitability, and lower cash taxes. The company has a disciplined approach to capital allocation, with approximately 70% of total capital deployed from fiscal 2020 to 2026 dedicated to growing the business through capital expenditures and strategic acquisitions.

Valuation and Outlook

With a P/E Ratio of 28.24 and an EV/EBITDA of 15.37, the stock appears to be reasonably valued. Analysts estimate next year's revenue growth at 13.2%, indicating a positive outlook. The company's focus on organic growth, strategic acquisitions, and improving working capital performance positions it for long-term success. The NDS acquisition is expected to contribute to the company's growth algorithm, with opportunities to invest in automation and new products.

Margin Expansion Drivers

The company's margin growth can be attributed to a better mix of products, particularly from Allied and Infiltrator, which have higher adjusted gross margins. Self-help initiatives across the company, including materials, conversion, logistics, and recycling, have also contributed to the margin growth, with Scott Barbour noting that these initiatives have gained momentum and exceeded expectations.

3. NewsRoom

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Bell Asset Management Ltd Has $3.59 Million Stock Holdings in Advanced Drainage Systems, Inc. $WMS

Mar -09

Source: defenseworld.net

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Advanced Drainage (WMS) Loses 12.4% in 4 Weeks, Here's Why a Trend Reversal May be Around the Corner

Mar -06

Source: zacks.com

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J vs. WMS: Which Stock Is the Better Value Option?

Feb -25

Source: zacks.com

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Advanced Drainage Systems, Inc. $WMS Shares Sold by Jones Financial Companies Lllp

Feb -17

Source: defenseworld.net

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Contrasting Argan (NYSE:AGX) and Advanced Drainage Systems (NYSE:WMS)

Feb -17

Source: defenseworld.net

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Buy These 5 Dividend Growth Stocks Amid AI Fear Disrupting Market

Feb -13

Source: zacks.com

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Advanced Drainage Systems Is Doing Great, But That Doesn't Mean Gains Deserve To Flow

Feb -12

Source: seekingalpha.com

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Essex Investment Management Co. LLC Has $5.95 Million Holdings in Advanced Drainage Systems, Inc. $WMS

Feb -10

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.46%)

6. Segments

Pipe

Expected Growth: 3.2%

Advanced Drainage Systems' 3.2% growth is driven by increasing demand for stormwater management solutions, growth in residential and commercial construction, and rising adoption of sustainable infrastructure practices. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to its growth momentum.

Allied Products and Other

Expected Growth: 3.8%

Advanced Drainage Systems' Allied Products and Other segment growth of 3.8% is driven by increasing demand for stormwater management solutions, expansion into new markets, and strategic acquisitions. Additionally, growth in residential and commercial construction, as well as infrastructure projects, contributes to the segment's growth.

Infiltrator

Expected Growth: 3.5%

Infiltrator's 3.5% growth is driven by increasing adoption in stormwater management, rising demand for sustainable infrastructure, and growing regulatory requirements for water quality management. Additionally, Advanced Drainage Systems' strategic expansion into new markets and product innovations are contributing to the segment's growth.

International

Expected Growth: 4.2%

Advanced Drainage Systems' international segment growth of 4.2% is driven by increasing infrastructure spending, urbanization, and water management needs in emerging markets. Strong demand for stormwater management solutions, coupled with strategic acquisitions and partnerships, have expanded the company's global footprint and contributed to its growth momentum.

7. Detailed Products

Highway Drainage Products

ADS offers a range of drainage products designed for highway applications, including corrugated polyethylene pipes, fittings, and accessories.

Stormwater Management Products

ADS provides a variety of stormwater management products, including stormwater management ponds, detention/retention systems, and green infrastructure solutions.

Agricultural Drainage Products

ADS offers a range of drainage products designed for agricultural applications, including corrugated polyethylene pipes, fittings, and accessories.

Residential Drainage Products

ADS provides a variety of drainage products designed for residential applications, including corrugated polyethylene pipes, fittings, and accessories.

Commercial Drainage Products

ADS offers a range of drainage products designed for commercial applications, including corrugated polyethylene pipes, fittings, and accessories.

Rehabilitation Products

ADS provides a variety of rehabilitation products, including pipe relining and pipe bursting systems.

8. Advanced Drainage Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Advanced Drainage Systems, Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for Advanced Drainage Systems, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Advanced Drainage Systems, Inc. is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Advanced Drainage Systems, Inc. is low due to the high barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Advanced Drainage Systems, Inc. is high due to the presence of several competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.84%
Debt Cost 8.30%
Equity Weight 49.16%
Equity Cost 11.53%
WACC 9.89%
Leverage 103.43%

11. Quality Control: Advanced Drainage Systems, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Beacon Roofing Supply

A-Score: 4.7/10

Value: 4.6

Growth: 5.2

Quality: 5.0

Yield: 0.0

Momentum: 7.5

Volatility: 6.0

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Advanced Drainage Systems

A-Score: 4.7/10

Value: 2.7

Growth: 6.7

Quality: 6.8

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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LP

A-Score: 4.6/10

Value: 3.3

Growth: 7.0

Quality: 6.1

Yield: 3.0

Momentum: 2.5

Volatility: 5.7

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Builders FirstSource

A-Score: 4.5/10

Value: 6.1

Growth: 8.3

Quality: 6.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.7

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Fortune Brands

A-Score: 4.3/10

Value: 5.2

Growth: 4.6

Quality: 5.4

Yield: 3.0

Momentum: 1.5

Volatility: 6.3

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AAON

A-Score: 4.0/10

Value: 2.9

Growth: 8.1

Quality: 6.4

Yield: 1.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

150.54$

Current Price

150.54$

Potential

-0.00%

Expected Cash-Flows