Head to Head Survey: Advanced Drainage Systems (NYSE:WMS) and TopBuild (NYSE:BLD)

Advanced Drainage Systems (NYSE:WMS) and TopBuild (NYSE:BLD) are both large-cap construction companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Advanced Drainage Systems and TopBuild, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advanced Drainage Systems	0	1	7	0	2.88
TopBuild	0	4	8	1	2.77

Advanced Drainage Systems presently has a consensus target price of $152.56, indicating a potential upside of 7.76%. TopBuild has a consensus target price of $394.67, indicating a potential downside of 5.44%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Advanced Drainage Systems is more favorable than TopBuild.

Insider & Institutional Ownership

89.8% of Advanced Drainage Systems shares are owned by institutional investors. Comparatively, 95.7% of TopBuild shares are owned by institutional investors. 1.6% of Advanced Drainage Systems shares are owned by company insiders. Comparatively, 0.4% of TopBuild shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Advanced Drainage Systems and TopBuild’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advanced Drainage Systems	14.82%	29.57%	12.23%
TopBuild	11.40%	28.32%	12.73%

Risk and Volatility

Advanced Drainage Systems has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, TopBuild has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advanced Drainage Systems	$2.92 billion	3.77	$450.17 million	$5.54	25.56
TopBuild	$5.33 billion	2.20	$622.60 million	$20.31	20.55

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

Summary

TopBuild beats Advanced Drainage Systems on 8 of the 15 factors compared between the two stocks.

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.

About TopBuild

TopBuild Corp., together with its subsidiaries, engages in the installation and distribution of insulation and other building material products to the construction industry. The company operates in two segments, Installation and Specialty Distribution. It provides insulation products and accessories, glass and windows, rain gutters, garage doors, fireplaces, roofing materials, closet shelving, and other products. The company also offers insulation installation services for fiberglass batts and rolls, blown-in loose fill fiberglass, polyurethane spray foam, and blown-in loose fill cellulose applications. In addition, it distributes building and mechanical insulation, insulation accessories, and other building product materials for the residential, commercial, and industrial end markets. The company serves single-family homebuilders, single-family custom builders, multi-family builders, commercial general contractors, remodelers, and individual homeowners, as well as insulation contractors, gutter contractors, weatherization contractors, other contractors, dealers, metal building erectors, and modular home builders. It operates installation branches and distribution centers in the United States and Canada. The company was formerly known as Masco SpinCo Corp. and changed its name to TopBuild Corp. in March 2015. TopBuild Corp. was incorporated in 2015 and is headquartered in Daytona Beach, Florida.