Advanced Drainage Systems, Inc. Fundamental Analysis
Advanced Drainage Systems, Inc. (WMS) shows moderate financial fundamentals with a PE ratio of 23.70, profit margin of 13.98%, and ROE of 22.43%. The company generates $3.0B in annual revenue with weak year-over-year growth of 1.04%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 63.3/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze WMS's fundamental strength across five key dimensions:
Efficiency Score
WeakWMS struggles to generate sufficient returns from assets.
Valuation Score
ExcellentWMS trades at attractive valuation levels.
Growth Score
WeakWMS faces weak or negative growth trends.
Financial Health Score
ExcellentWMS maintains a strong and stable balance sheet.
Profitability Score
ModerateWMS maintains healthy but balanced margins.
Key Financial Metrics
Is WMS Expensive or Cheap?
P/E Ratio
WMS trades at 23.70 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, WMS's PEG of -4.30 indicates potential undervaluation.
Price to Book
The market values Advanced Drainage Systems, Inc. at 5.23 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 9.00 times EBITDA. This is generally considered low.
How Well Does WMS Make Money?
Net Profit Margin
For every $100 in sales, Advanced Drainage Systems, Inc. keeps $13.98 as profit after all expenses.
Operating Margin
Core operations generate 22.79 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $22.43 in profit for every $100 of shareholder equity.
ROA
Advanced Drainage Systems, Inc. generates $9.47 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Advanced Drainage Systems, Inc. generates strong operating cash flow of $806.19M, reflecting robust business health.
Free Cash Flow
Advanced Drainage Systems, Inc. generates strong free cash flow of $560.35M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $7.32 in free cash annually.
FCF Yield
WMS converts 5.67% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.70
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-4.30
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.23
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.26
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.92
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.42
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.22
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.17
vs 25 benchmark
How WMS Stacks Against Its Sector Peers
| Metric | WMS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 23.70 | 25.99 | Neutral |
| ROE | 22.43% | 1259.00% | Weak |
| Net Margin | 13.98% | -34891.00% (disorted) | Strong |
| Debt/Equity | 0.92 | 0.74 | Weak (High Leverage) |
| Current Ratio | 2.42 | 9.71 | Strong Liquidity |
| ROA | 9.47% | -1482943.00% (disorted) | Weak |
WMS outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Advanced Drainage Systems, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
42.79%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
291.78%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
56.29%
Industry Style: Cyclical, Value, Infrastructure
High Growth