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    Reaffirmed Guidance and Surging Water-Quality Growth Might Change The Case For Investing In Advanced Drainage Systems (WMS)

    Simply Wall St·12/14/2025 13:11:38
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    • In recent months, Brown Brothers Harriman highlighted Advanced Drainage Systems as a key positive contributor to its mid-cap fund after the company delivered better-than-expected sales and earnings, while Barclays reaffirmed a positive analyst stance and the firm reiterated its fiscal 2026 guidance.
    • The business is seeing double-digit organic growth in areas such as water quality and stormwater capture solutions, even as short interest inches higher and insider selling picks up, pointing to a complex mix of confidence and caution around its outlook.
    • Next, we’ll examine how this reaffirmed guidance and strong water-quality growth influence Advanced Drainage Systems’ existing investment narrative.

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    Advanced Drainage Systems Investment Narrative Recap

    To own Advanced Drainage Systems, you need to believe in long term demand for water management and higher value water quality solutions, supported by disciplined execution even when construction markets are uneven. The reaffirmed fiscal 2026 guidance and stronger than expected recent earnings support that thesis in the near term, while the biggest current risk remains a prolonged slowdown in construction and infrastructure spending. The recent uptick in short interest and insider selling does not appear to materially change that core risk.

    The most relevant recent announcement here is ADS’s second quarter fiscal 2026 update, where revenue grew 9% to US$850.4 million and management reiterated full year guidance. That performance, alongside double digit organic growth in water quality and stormwater capture, ties directly into the key catalyst of rising regulatory and infrastructure focus on water quality and resilient drainage solutions, even as the share price already trades on a premium earnings multiple to the building industry and peers.

    Yet behind the strong water quality growth and reaffirmed guidance, investors should still be aware of the risk that a prolonged period of weak construction and infrastructure demand could...

    Read the full narrative on Advanced Drainage Systems (it's free!)

    Advanced Drainage Systems' narrative projects $3.3 billion revenue and $558.3 million earnings by 2028. This requires 4.3% yearly revenue growth and about a $125.6 million earnings increase from $432.7 million today.

    Uncover how Advanced Drainage Systems' forecasts yield a $171.10 fair value, a 14% upside to its current price.

    Exploring Other Perspectives

    WMS 1-Year Stock Price Chart
    WMS 1-Year Stock Price Chart

    Four fair value views from the Simply Wall St Community span roughly US$93 to US$171 per share, highlighting how differently investors can assess ADS. Set against reaffirmed 2026 guidance and strong water quality growth, this spread invites you to weigh contrasting assumptions about how resilient those end markets really are.

    Explore 4 other fair value estimates on Advanced Drainage Systems - why the stock might be worth as much as 14% more than the current price!

    Build Your Own Advanced Drainage Systems Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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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.