WMS Should I Buy
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Advanced Drainage Systems Inc (WMS) is a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The company's strong financial performance, positive analyst ratings, and growth initiatives like the $500M senior unsecured notes offering make it a solid choice for long-term growth. Despite hedge fund selling, the stock's technical indicators and positive catalysts outweigh the negatives.
The stock is currently in a bullish trend with moving averages (SMA_5 > SMA_20 > SMA_200) indicating upward momentum. The MACD histogram is positive at 1.038, and RSI_6 is neutral at 58.555, suggesting no overbought or oversold conditions. Key resistance levels are at 176.798 and 183.384, with support at 166.139 and 155.479.
Strong Q3 financial performance with YoY increases in revenue (+0.41%), net income (+15.26%), EPS (+14.42%), and gross margin (+7.69%).
Raised FY26 guidance and positive outlook from management.
Analysts have consistently raised price targets, with the highest being $215, reflecting strong confidence in the company's growth.
The $500M senior unsecured notes offering to enhance capital structure and fund growth initiatives.
Hedge funds are selling, with a 368.98% increase in selling activity over the last quarter.
Options data shows a higher put-call volume ratio, indicating some short-term bearish sentiment.
No recent congress trading data or insider buying activity to support additional confidence.
In Q3 2026, the company reported revenue of $693.35M (+0.41% YoY), net income of $93.63M (+15.26% YoY), EPS of $1.19 (+14.42% YoY), and gross margin of 35.43% (+7.69% YoY). This demonstrates strong profitability and operational efficiency despite a challenging market environment.
Analysts are highly positive on WMS, with multiple firms raising price targets recently. The highest target is $215 (UBS), and the lowest is $198 (KeyBanc and Barclays), with all maintaining Buy or Outperform ratings. Analysts cite strong EBITDA performance, end-market outperformance, and growth potential from the NDS acquisition as key drivers.
