Results: Advanced Drainage Systems, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
Advanced Drainage Systems, Inc. (NYSE:WMS) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.7% to hit US$662m. Advanced Drainage Systems also reported a statutory profit of US$1.34, which was an impressive 29% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Advanced Drainage Systems
Taking into account the latest results, the most recent consensus for Advanced Drainage Systems from eight analysts is for revenues of US$2.99b in 2025. If met, it would imply a satisfactory 5.4% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 6.5% to US$6.88. In the lead-up to this report, the analysts had been modelling revenues of US$2.96b and earnings per share (EPS) of US$6.47 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 17% to US$175. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Advanced Drainage Systems at US$189 per share, while the most bearish prices it at US$145. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Advanced Drainage Systems' revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2025 being well below the historical 18% p.a. growth over the last five years. Compare this to the 53 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.1% per year. Factoring in the forecast slowdown in growth, it looks like Advanced Drainage Systems is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Advanced Drainage Systems following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Advanced Drainage Systems going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Advanced Drainage Systems you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
