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

Advanced Drainage Systems (NYSE:WMS) announced its earnings results on Thursday. The construction company reported $2.49 EPS for the quarter, beating analysts’ consensus estimates of $2.10 by $0.39, Zacks reports. Advanced Drainage Systems had a return on equity of 28.28% and a net margin of 14.00%.The company had revenue of $1 billion during the quarter, compared to the consensus estimate of $991.39 million. During the same quarter in the prior year, the company earned $1.95 earnings per share. The firm’s revenue for the quarter was up 20.6% on a year-over-year basis.

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 Down 2.8%

Advanced Drainage Systems stock traded down $4.17 on Friday, hitting $144.28. 825,757 shares of the stock traded hands, compared to its average volume of 655,971. The company has a current ratio of 2.12, a quick ratio of 1.35 and a debt-to-equity ratio of 0.95. The firm 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. The business’s fifty day simple moving average is $143.75 and its 200 day simple moving average is $147.99. 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 company also recently disclosed a quarterly dividend, which will be paid on Tuesday, September 15th. Shareholders of record on Tuesday, September 1st will be issued a $0.20 dividend. The ex-dividend date is Tuesday, September 1st. This represents a $0.80 dividend on an annualized basis and a yield of 0.6%. Advanced Drainage Systems’s dividend payout ratio is 14.71%.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the business. Northwestern Mutual Wealth Management Co. grew its holdings in Advanced Drainage Systems by 352.0% in the second quarter. Northwestern Mutual Wealth Management Co. now owns 226 shares of the construction company’s stock worth $26,000 after purchasing an additional 176 shares during the period. Caitong International Asset Management Co. Ltd bought a new position in shares of Advanced Drainage Systems during the third quarter valued at approximately $36,000. Kestra Advisory Services LLC purchased a new position in shares of Advanced Drainage Systems during the fourth quarter valued at approximately $37,000. Los Angeles Capital Management LLC purchased a new position in shares of Advanced Drainage Systems during the fourth quarter valued at approximately $42,000. Finally, Danske Bank A S bought a new stake in shares of Advanced Drainage Systems in the 3rd quarter worth approximately $55,000. 89.83% of the stock is currently owned by institutional investors.

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?

Wall Street Analysts Forecast Growth

A number of brokerages have issued reports on WMS. Stephens raised shares of Advanced Drainage Systems from an “equal weight” rating to an “overweight” rating and reduced their price objective for the company from $190.00 to $175.00 in a research report on Wednesday, May 27th. Robert W. Baird set a $206.00 target price on shares of Advanced Drainage Systems in a research report on Friday. KeyCorp reaffirmed an “overweight” rating on shares of Advanced Drainage Systems in a research note on Monday, June 22nd. Weiss Ratings reiterated a “hold (c)” rating on shares of Advanced Drainage Systems in a research report on Friday, July 17th. Finally, Barclays increased their price target on shares of Advanced Drainage Systems from $181.00 to $191.00 and gave the stock an “overweight” rating in a research note on Tuesday, July 14th. Seven investment analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the company’s stock. According to data from MarketBeat, Advanced Drainage Systems presently has a consensus rating of “Moderate Buy” and a consensus target price of $188.38.

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.