Is Now The Time To Look At Buying Advanced Drainage Systems, Inc. (NYSE:WMS)?

Advanced Drainage Systems, Inc. (NYSE:WMS), which is in the building business, and is based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Advanced Drainage Systems’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Advanced Drainage Systems

What’s the opportunity in Advanced Drainage Systems?

Great news for investors – Advanced Drainage Systems is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $75.21, but it is currently trading at US$40.96 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Advanced Drainage Systems’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Advanced Drainage Systems generate?

NYSE:WMS Past and Future Earnings, January 16th 2020
NYSE:WMS Past and Future Earnings, January 16th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 88% over the next year, the near-term future seems bright for Advanced Drainage Systems. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since WMS is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on WMS for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy WMS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Advanced Drainage Systems. You can find everything you need to know about Advanced Drainage Systems in the latest infographic research report. If you are no longer interested in Advanced Drainage Systems, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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