Advance Drainage – no margin of safety

[i4value]

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.