Comparing Advanced Drainage Systems (NYSE:WMS) and Armstrong World Industries (NYSE:AWI)

Advanced Drainage Systems (NYSE:WMS) and Armstrong World Industries (NYSE:AWI) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Risk & Volatility

Advanced Drainage Systems has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, Armstrong World Industries has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Advanced Drainage Systems	14.00%	28.28%	12.30%
Armstrong World Industries	18.38%	38.06%	17.16%

Institutional & Insider Ownership

89.8% of Advanced Drainage Systems shares are held by institutional investors. Comparatively, 98.9% of Armstrong World Industries shares are held by institutional investors. 1.7% of Advanced Drainage Systems shares are held by company insiders. Comparatively, 1.2% of Armstrong World Industries shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for Advanced Drainage Systems and Armstrong World Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advanced Drainage Systems	0	2	8	0	2.80
Armstrong World Industries	0	2	7	0	2.78

Advanced Drainage Systems currently has a consensus target price of $187.40, suggesting a potential upside of 38.37%. Armstrong World Industries has a consensus target price of $203.12, suggesting a potential upside of 22.06%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Advanced Drainage Systems is more favorable than Armstrong World Industries.

Dividends

Advanced Drainage Systems pays an annual dividend of $0.80 per share and has a dividend yield of 0.6%. Armstrong World Industries pays an annual dividend of $1.36 per share and has a dividend yield of 0.8%. Advanced Drainage Systems pays out 13.8% of its earnings in the form of a dividend. Armstrong World Industries pays out 18.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Advanced Drainage Systems has increased its dividend for 1 consecutive years and Armstrong World Industries has increased its dividend for 1 consecutive years.

Valuation and Earnings

This table compares Advanced Drainage Systems and Armstrong World Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advanced Drainage Systems	$3.05 billion	3.35	$426.46 million	$5.79	23.39
Armstrong World Industries	$1.62 billion	4.30	$308.70 million	$7.49	22.22

Advanced Drainage Systems has higher revenue and earnings than Armstrong World Industries. Armstrong World Industries 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

Advanced Drainage Systems beats Armstrong World Industries on 9 of the 16 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 Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.