Advanced Drainage Systems
WMS
$147.98
-1.94%
Advanced Drainage Systems, Inc. (WMS) is a leading manufacturer of water management solutions, specializing in stormwater and onsite wastewater drainage products for the construction and agriculture industries. As a market leader in thermoplastic corrugated pipe, the company differentiates itself through its extensive product portfolio, including N-12 HDPE pipe and StormTech chambers, and its vertically integrated manufacturing capabilities. The current investor narrative centers on the company's ability to sustain growth amid a mixed construction environment, with recent quarterly results showing a rebound in revenue growth but a sharp decline in profitability, raising questions about margin sustainability and the impact of strategic acquisitions on near-term earnings.…
WMS
Advanced Drainage Systems
$147.98
Related headlines
WMS 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Advanced Drainage Systems's 12-month outlook, with a consensus price target around $183.36 and implied upside of +23.9% versus the current price.
Average Target
$183.36
0 analysts
Implied Upside
+23.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$165 - $207
Analyst target range
WMS is covered by 11 analysts, with a consensus recommendation of 'Strong Buy' (mean rating of 1.18 on a 1-5 scale). The average target price is $183.36, implying an upside of 21.5% from the current price of $150.91. The distribution shows no sell ratings, with the majority of analysts rating it as Buy or Overweight, indicating a bullish sentiment. The target price range spans from $165.00 (low) to $207.00 (high), with the high target suggesting a 37.2% upside, likely assuming successful margin recovery and continued market share gains. The low target implies a 9.3% upside, reflecting a more conservative outlook on construction demand. Recent ratings actions have been positive, with Stephens & Co. upgrading from Equal Weight to Overweight in May 2026, and Barclays, RBC Capital, and Oppenheimer reaffirming their bullish stances, signaling growing institutional confidence in the stock.
Bulls vs Bears: WMS Investment Factors
WMS presents a mixed picture: strong analyst conviction and a rebound in revenue growth are offset by a sharp profitability decline and elevated leverage. The bull case rests on margin recovery and continued demand, while the bear case highlights cost pressures and valuation premium. Currently, the evidence slightly favors the bulls due to the strong analyst consensus and forward PE discount, but the key tension is whether gross margins can recover from 32.4% to historical ~36% levels. If margins recover, the stock could re-rate higher; if not, the premium valuation may compress.
Bullish
- Strong Buy consensus with 21.5% upside: 11 analysts rate WMS a Strong Buy (mean 1.18), with an average target of $183.36, implying 21.5% upside from $150.91. No sell ratings and recent upgrades (Stephens to Overweight) signal institutional confidence.
- Revenue growth rebounded to 9.9%: Q4 FY2026 revenue grew 9.9% YoY to $676.8M, recovering from the prior quarter's 0.4% growth. This acceleration suggests demand is stabilizing in core construction and infrastructure markets.
- High profitability and ROE of 22.1%: WMS maintains a net margin of 14.0% and ROE of 22.1%, well above industry averages. This demonstrates pricing power and efficient capital use, supporting a premium valuation.
- Forward PE implies 25% earnings growth: Trailing PE of 25.0x vs forward PE of 20.0x suggests the market expects ~25% EPS growth. If margins recover to historical levels, this growth is achievable, making the stock attractive.
Bearish
- Sharp profit decline in Q4: Net income fell 57% YoY to $32.9M and EPS dropped from $0.99 to $0.42. Gross margin contracted to 32.4% from 36.7%, indicating cost pressures and integration costs from acquisitions.
- Trading at 13.7% premium to industry: Trailing PE of 25.0x is above the industry average of 22x. If growth decelerates, the premium could compress, leading to multiple de-rating and share price downside.
- High debt-to-equity of 0.93: Debt-to-equity is nearly 1:1, increasing financial risk. Rising interest rates could pressure earnings further, especially with interest expense already at $25M per quarter.
- Underperformance vs S&P 500: WMS returned +8.3% over 1 year vs S&P 500's +20.4%, and -11.7% over 6 months vs +13.9% for the index. Persistent relative weakness may indicate structural issues.
WMS Technical Analysis
WMS is currently trading at $150.91, which is 84.2% of its 52-week range (low of $128.03, high of $179.315). The stock has delivered a 1-year price change of +8.34%, indicating a modest uptrend, but it remains well below its 52-week high, suggesting a recovery from a significant drawdown. The price action over the past six months shows a decline of -11.74%, reflecting a period of consolidation and volatility, with the stock currently positioned in the middle of its range, implying a lack of clear directional bias.
Beta
1.29
1.29x market volatility
Max Drawdown
-26.2%
Largest decline past year
52-Week Range
$128-$179
Price range past year
Annual Return
+6.6%
Cumulative gain past year
| Period | WMS Return | S&P 500 |
|---|---|---|
| 1m | +0.3% | +4.0% |
| 3m | +12.5% | +5.3% |
| 6m | -12.9% | +12.6% |
| 1y | +6.6% | +20.1% |
| ytd | -1.1% | +13.3% |
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WMS Fundamental Analysis
In the most recent quarter (Q4 FY2026, ended March 31, 2026), WMS reported revenue of $676.8 million, a 9.9% increase year-over-year, marking a rebound from the prior quarter's 0.4% growth. However, this growth was accompanied by a sharp decline in profitability, with net income of $32.9 million, down significantly from $77.2 million in the year-ago quarter, and EPS of $0.42 versus $0.99. The gross margin contracted to 32.4% from 36.7% in the prior year, while the operating margin fell to 19.1% from 19.0%, indicating cost pressures and integration costs from recent acquisitions. For the full year, revenue growth has been uneven, with Q2 FY2026 showing a 8.7% increase, but Q3 FY2026 only 0.4%, suggesting a decelerating trend that may be stabilizing.
Quarterly Revenue
$676761000.0B
2026-03
Revenue YoY Growth
+9.9%
YoY Comparison
Gross Margin
32.4%
Latest Quarter
Free Cash Flow
$569288000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is WMS Overvalued?
Given that WMS is profitable, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 25.02x, while the forward PE is 20.04x, indicating that the market expects earnings growth of approximately 25% over the next year. This forward discount suggests optimism about margin recovery and continued revenue growth. Compared to the industry average PE of 22x (based on available data), WMS trades at a 13.7% premium, which may be justified by its strong ROE of 22.1% and net margin of 14.0%, both above industry norms. Historically, WMS's PE has ranged from 10x to 81.6x over the past few years, with the current trailing PE of 25x sitting near the middle of that range, suggesting the stock is fairly valued relative to its own history.
PE
25.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 10x~46x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are significant: WMS's debt-to-equity of 0.93 indicates high leverage, and interest expense of $25M per quarter could rise with rates. The sharp drop in net income to $32.9M in Q4 (from $77.2M) shows earnings volatility, and gross margin contraction to 32.4% (from 36.7%) signals cost pressures. Free cash flow of $569M provides some buffer, but if margins stay depressed, cash generation could weaken, straining debt service and dividend sustainability.