Advanced Drainage Systems (NYSE:WMS) Announces Quarterly Earnings Results, Beats Expectations By $0.39 EPS

Advanced Drainage Systems (NYSE:WMS) announced its quarterly earnings results on Thursday. The construction company reported $2.49 EPS for the quarter, topping the consensus estimate of $2.10 by $0.39, Zacks reports. Advanced Drainage Systems had a net margin of 14.00% and a return on equity of 28.28%. The firm had revenue of $1 billion for the quarter, compared to analyst estimates of $991.39 million. During the same period last year, the business earned $1.95 EPS. Advanced Drainage Systems’s revenue for the quarter was up 20.6% compared to the same quarter last year.

Here are the key takeaways from Advanced Drainage Systems’ conference call:

• Strong first-quarter results: Revenue surpassed $1 billion, up 21% year over year, while organic sales rose 9% and adjusted EBITDA increased 29% to $358 million, producing a 35.8% margin.
• Diversification supported outperformance: Non-residential sales grew 14% organically, wastewater revenue increased 8%, and stormwater storage products rose 18%, helping offset weakness in residential construction and retail.
• NDS integration is progressing: NDS generated $95 million of revenue in the quarter and performed strongly, although management said meaningful cross-selling synergies are still ahead and cautioned that the first quarter is typically its strongest.
• Near-term margin pressure is expected: Approximately $25 million-$30 million of revenue was pulled into the first quarter ahead of price increases, while higher resin and transportation costs are expected to weigh more heavily in the second and third quarters, causing sequential margin compression beyond the normal 300 basis points.
• Guidance and financial flexibility were maintained: Full-year revenue guidance remains $3.35 billion-$3.55 billion and adjusted EBITDA guidance remains $1.0 billion-$1.05 billion; free cash flow was $203 million, net leverage was approximately 1.5 times, and the company repurchased about $250 million of shares and dividends in the quarter.

Advanced Drainage Systems Stock Performance

Shares of WMS stock traded down $4.17 during trading hours on Friday, reaching $144.28. 825,757 shares of the company’s stock were exchanged, compared to its average volume of 655,971. The company has a debt-to-equity ratio of 0.95, a current ratio of 2.12 and a quick ratio of 1.35. The company’s 50 day moving average is $143.85 and its two-hundred day moving average is $147.96. The company has a market cap of $11.06 billion, a P/E ratio of 24.92, a price-to-earnings-growth ratio of 1.60 and a beta of 1.27. Advanced Drainage Systems has a 1 year low of $128.03 and a 1 year high of $179.32.

Advanced Drainage Systems Announces Dividend

The firm also recently announced a quarterly dividend, which will be paid on Tuesday, September 15th. Stockholders of record on Tuesday, September 1st will be paid a dividend of $0.20 per share. This represents a $0.80 dividend on an annualized basis and a dividend yield of 0.6%. The ex-dividend date of this dividend is Tuesday, September 1st. Advanced Drainage Systems’s dividend payout ratio is 14.71%.

Institutional Inflows and Outflows

Large investors have recently bought and sold shares of the business. UMB Bank n.a. grew its position in Advanced Drainage Systems by 10.4% during the fourth quarter. UMB Bank n.a. now owns 1,174 shares of the construction company’s stock worth $170,000 after buying an additional 111 shares during the period. DRW Securities LLC acquired a new stake in shares of Advanced Drainage Systems in the 4th quarter worth approximately $204,000. State of Wyoming increased its stake in Advanced Drainage Systems by 139.8% in the 4th quarter. State of Wyoming now owns 1,357 shares of the construction company’s stock valued at $197,000 after purchasing an additional 791 shares in the last quarter. Dark Forest Capital Management LP acquired a new position in Advanced Drainage Systems during the third quarter worth $219,000. Finally, F m Investments LLC purchased a new stake in Advanced Drainage Systems during the third quarter worth $220,000. Hedge funds and other institutional investors own 89.83% of the company’s stock.

Analyst Upgrades and Downgrades

Several equities analysts have issued reports on the company. Zacks Research raised Advanced Drainage Systems from a “strong sell” rating to a “hold” rating in a report on Monday, July 27th. Barclays boosted their target price on Advanced Drainage Systems from $181.00 to $191.00 and gave the company an “overweight” rating in a report on Tuesday, July 14th. KeyCorp restated an “overweight” rating on shares of Advanced Drainage Systems in a research note on Monday, June 22nd. Royal Bank Of Canada lifted their price target on Advanced Drainage Systems from $170.00 to $178.00 and gave the stock an “outperform” rating in a research report on Friday. Finally, Stephens raised Advanced Drainage Systems from an “equal weight” rating to an “overweight” rating and cut their price target for the stock from $190.00 to $175.00 in a research report on Wednesday, May 27th. Seven analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to data from MarketBeat.com, Advanced Drainage Systems has an average rating of “Moderate Buy” and a consensus target price of $188.38.

Key Headlines Impacting Advanced Drainage Systems

Here are the key news stories impacting Advanced Drainage Systems this week:

• Positive Sentiment: Results exceeded expectations: Fiscal Q1 2027 EPS was $2.49, above the $2.10-$2.19 analyst estimates and up from $1.95 a year earlier. Revenue reached approximately $1.0 billion, beating the $991.4 million consensus estimate and increasing 20.6% year over year. Advanced Drainage Systems Announces First Quarter Fiscal 2027 Results
• Positive Sentiment: Dividend increased: The board approved a quarterly dividend of $0.20 per share, an 11% increase from the prior year. The dividend is payable September 15 to shareholders of record September 1. Advanced Drainage Systems Announces Quarterly Cash Dividend
• Neutral Sentiment: Fiscal 2027 outlook was broadly in line: Management forecast revenue of $3.4 billion to $3.6 billion, surrounding the roughly $3.5 billion consensus estimate. The range does not represent a clear upward revision that would materially improve investor expectations. Advanced Drainage Systems Q1 Earnings and Revenues Top Estimates
• Negative Sentiment: Cost pressures cloud the outlook: Commentary highlighted inflation and recycling-market factors that could pressure margins or limit the benefit of strong demand, causing investors to focus on forward profitability rather than the quarterly beat. WMS Q2 Deep Dive
• Negative Sentiment: Valuation may limit upside: At roughly 26.5 times earnings and a 1.61 PEG ratio, WMS is not an obvious deep-value stock. A comparison with Gibraltar Industries (ROCK) may encourage valuation-sensitive investors to favor the alternative. ROCK or WMS: Which Is the Better Value Stock Right Now?

About Advanced Drainage Systems

Advanced Drainage Systems, Inc (NYSE: WMS) is a leading manufacturer and supplier of water management solutions in North America. Headquartered in Hilliard, Ohio, the company specializes in the design, production and distribution of high-density polyethylene (HDPE) drainage pipe and related products. Its core business addresses stormwater management, on-site septic systems and erosion control for residential, commercial and infrastructure projects.

The company’s product portfolio includes corrugated plastic pipe, tubing, fittings, geocells, geogrids and stormwater structures such as inlets, manholes and detention/retention systems.