Loop Capital analyst Garik Shmois has revised the price target for Advanced Drainage Systems (WMS, Financial), reducing it from $143 to $133, though maintaining a Buy rating on the stock. The adjustment follows the company’s weaker-than-expected Q4 EBITDA results and a conservative outlook reflecting the current challenging macroeconomic environment. However, there is optimism due to signs of stabilizing pricing trends and an anticipated decline in raw material costs, which suggests that the latest guidance establishes a baseline for future earnings. Despite the softer demand across several end markets, the assessment holds that the company's strategies are reasonable given current conditions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for Advanced Drainage Systems Inc (WMS, Financial) is $141.40 with a high estimate of $160.00 and a low estimate of $130.00. The average target implies an upside of 20.30% from the current price of $117.54. More detailed estimate data can be found on the Advanced Drainage Systems Inc (WMS) Forecast page.
Based on the consensus recommendation from 9 brokerage firms, Advanced Drainage Systems Inc's (WMS, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Advanced Drainage Systems Inc (WMS, Financial) in one year is $132.76, suggesting a upside of 12.95% from the current price of $117.54. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Advanced Drainage Systems Inc (WMS) Summary page.
WMS Key Business Developments
Release Date: May 15, 2025
- Net Sales: $2.9 billion, an increase of 1% over the prior year.
- Domestic Construction Market Sales: Increased 3%.
- Adjusted EBITDA Margin: 30.6%, marking the second most profitable year in the company's history.
- Infiltrator Sales: $516 million, an increase of 15% over prior years.
- Organic Sales Growth: Infiltrator segments increased 5%, Allied products increased 3%.
- Free Cash Flow: $581 million generated from operations during fiscal 2025.
- Capital Spending: Increased 15% to $212 million in fiscal 2025.
- Liquidity: Closed the year with $1.1 billion in liquidity.
- Net Leverage: 1.1 times.
- Dividend Increase: 13% increase to $0.72 per share annually.
- Fiscal 2026 Revenue Guidance: $2.825 billion to $2.975 billion.
- Fiscal 2026 Adjusted EBITDA Guidance: $850 million to $910 million.
- Fiscal 2026 Adjusted EBITDA Margin Guidance: 30.1% to 30.6%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Advanced Drainage Systems Inc (WMS, Financial) reported net sales of $2.9 billion for fiscal 2025, marking a 1% increase over the previous year.
- The company achieved a 30.6% adjusted EBITDA margin, making it the second most profitable year in its history despite economic challenges.
- Infiltrator, a segment of Advanced Drainage Systems Inc (WMS), reported a 15% increase in sales, driven by double-digit growth in septic tanks and advanced treatment products.
- The company has strategically diversified its product, geography, and end-market mix, enhancing its profitability and resilience.
- Advanced Drainage Systems Inc (WMS) has a strong cash flow generation, with $581 million generated from operations in fiscal 2025, allowing for strategic investments and shareholder returns.
Negative Points
- Net sales decreased by 6% in the fourth quarter due to higher interest rates, economic uncertainty, and unfavorable weather conditions.
- The company faces challenges in the non-residential and residential markets, which are under pressure from higher interest rates and economic uncertainty.
- Manufacturing costs are expected to be unfavorable in the first quarter of fiscal 2026 due to lower production volumes and fixed cost absorption.
- The agriculture and international markets are projected to decline by double digits in fiscal 2026.
- The company postponed its Investor Day due to economic uncertainty, indicating challenges in providing a solid three-year plan.
