WMS

Advanced Drainage Systems

Fundamental data last updated:April 13, 2026

company profile

SECTOR

Industrials

industry

Building Products & Equipment

Exchange

NYSE

County of HQ

United States

Next Earnings Date

05/21/26

Business Summary

Advanced Drainage Systems manufactures and distributes water management and drainage solutions, converting engineered plastic piping systems into recurring infrastructure demand. The business generates cash through large-scale production efficiencies and distribution scale, which help sustain its 23.50% Operating Margin. Its moat is rooted in manufacturing scale, entrenched contractor relationships, and regulatory-driven infrastructure needs that are non-discretionary. With a 16.30% ROIC and strong liquidity profile, it monetizes physical infrastructure cycles while maintaining disciplined capital allocation.

VALUATION

P/E

24.5

Market Cap ($M USD)

$11,464

Forward P/E

21.7

PEG

3.5

PRICE TO SALES

3.9

PRICE TO BOOK

5.7

EV / EBITDA

13

5-Year Average P/E

DIVIDEND

Yield

0.50%

Annual Payout

$0.72

Payout Ratio

11.60%

Consecutive Years of Dividend Growth

10+

5-Year Dividend Growth Rate

14.90%

Financial Health & Profitability

Earnings Per Share

$6.06

Next Year EPS Growth Estimate

$6.79

Next Year Revenue Growth Estimate

13.00%

Return on Equity (ROE)

23.50%

Operating Margin

22.70%

Debt-to-Equity

0.7

Piotroski F-Score

6

Altman Z-Score

5.5

Return on Invested Capital (ROIC)

16.30%%

Current Ratio

4.1

Quick Ratio

Gainseekers Quantitative Analysis

Summary

Advanced Drainage Systems screens as financially solid but not obviously cheap. A Forward P/E of 21.7 against a PEG Forward of 3.5 tells me growth expectations are already priced aggressively, despite a Return on Equity of just 13.00%. The Altman Z-Score of 5.5 signals extremely low bankruptcy risk, reinforced by a strong 4.1 Current Ratio and modest 22.70% Debt/Equity, so balance sheet safety is not the issue. The market is not mispricing distress; it is debating growth durability. At 24.5x earnings and 3.9x sales, this is a quality industrial compounder trading at a premium multiple that demands execution.

AI Exposure / Tech Reliance

As a Building Products & Equipment company in Industrials, AI disruption risk is low but AI-driven operational optimization is real. Margins of 23.50% suggest room for further efficiency gains through automation, logistics analytics, and smart manufacturing. The real tech resilience comes from physical infrastructure demand, which is far less vulnerable to digital displacement than asset-light sectors.

The Bull Case

A GARP investor buys this because the business throws off real returns on capital. ROIC at 16.30% versus a 13.00% ROE suggests disciplined capital deployment and productive asset utilization, while a Piotroski F-Score of 6 indicates stable, above-average financial health without distress signals. Operating Margin at 23.50% in an industrial business is elite and implies pricing power or cost advantages. Debt/Equity of 22.70% combined with a 4.1 Current Ratio gives management flexibility across cycles. Add a 0.7 yield with a 10+% five-year dividend growth rate, and you have a company that reinvests while still returning capital—exactly what long-duration GARP mandates seek.

The Bear Case

Now the problems. A PEG Forward of 3.5 is the loudest red flag in this entire dataset—growth is not keeping up with valuation. Short interest at 14.90% of float is elevated, signaling sophisticated skepticism about forward earnings durability. At 5.7x book and 3.9x sales, you are paying a premium multiple for a cyclical industrial, and the P/E of 24.5 leaves no margin of safety if volumes soften. Even with only 22.70% Debt/Equity, this multiple structure makes the stock vulnerable to any compression in Operating Margin from its currently high 23.50% level.

Market Sentiment & Smart Money

Short Interest %

3.80%

Analyst Consensus

1.45

Average Analyst Price Target

$193.10

Institutional Ownership %

96.10%

1-Year Beta

1.29

Insider Buying % (6 Mo)

6.80%%

Distance to 52-Week High

82.10%%

Distance to 52-Week Low

146.50%%