22-12-2023, 09:06 AM
Advance Drainage Systems (NYSE: WMS) is the leading manufacturer of innovative water management solutions. WMS achieved 12.7% CAGR revenue growth over the past 9 years, driven by acquisitions and the past 2 years of high product prices.
This led to growing ROE and gross profitability. The growth in revenue and profitability is not sustainable. I also have concerns about the company's financial strengths. A valuation assuming that the high price situation persists did not provide a margin of safety.
![[Image: Advance-Drainage.png]](https://i.postimg.cc/qvfJYrwR/Advance-Drainage.png)
This led to growing ROE and gross profitability. The growth in revenue and profitability is not sustainable. I also have concerns about the company's financial strengths. A valuation assuming that the high price situation persists did not provide a margin of safety.