Reviewing Obayashi (OTCMKTS:OBYCF) and Advanced Drainage Systems (NYSE:WMS)

Obayashi (OTCMKTS:OBYCF) and Advanced Drainage Systems (NYSE:WMS) are both large-cap construction companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Institutional & Insider Ownership

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Obayashi and Advanced Drainage Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Obayashi	0	0	0	0	0.00
Advanced Drainage Systems	0	2	8	0	2.80

Advanced Drainage Systems has a consensus target price of $157.11, suggesting a potential upside of 8.45%. Given Advanced Drainage Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Advanced Drainage Systems is more favorable than Obayashi.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Obayashi	6.64%	9.41%	3.73%
Advanced Drainage Systems	15.35%	28.85%	12.36%

Earnings and Valuation

This table compares Obayashi and Advanced Drainage Systems”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Obayashi	$17.21 billion	0.84	$976.81 million	$1.59	12.58
Advanced Drainage Systems	$2.90 billion	3.88	$450.17 million	$5.86	24.72

Obayashi has higher revenue and earnings than Advanced Drainage Systems. Obayashi 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.

Risk and Volatility

Obayashi has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500. Comparatively, Advanced Drainage Systems has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Summary

Advanced Drainage Systems beats Obayashi on 12 of the 14 factors compared between the two stocks.

About Obayashi

Obayashi Corporation engages in the construction business in Japan, North America, Asia, the Middle East, Europe, and Oceania. The company constructs buildings, including offices, condominiums, commercial facilities, factories, hospitals, and schools; and civil engineering projects, such as tunnels, bridges, dams, river works, urban civil engineering structures, railroads, and expressways. It is also involved in the development and leasing of real estate properties in various locations, primarily in urban areas, as well as property management activities; solar, biomass, geothermal, and wind power generation business; and PPP and agriculture business. In addition, the company provides non-life insurance agency business. Further, it engages in the provision of urban redevelopment, contracted operations, and facility management services, as well as M&E design and construction activities. The company was founded in 1892 and is headquartered in Tokyo, Japan.

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.