Is Advanced Drainage Systems, Inc. overvalued or undervalued?

As of 10 June 2025, the valuation grade for Advanced Drainage Systems, Inc. has moved from fair to expensive. The company is currently considered overvalued. Key ratios include a P/E ratio of 21, a Price to Book Value of 5.73, and an EV to EBITDA of 12.08. In comparison to peers, Advanced Drainage Systems has a P/E ratio higher than Berry Global Group, Inc. at 14.64 and lower than Armstrong World Industries, Inc. at 31.98, indicating a relative overvaluation in its sector.
Despite a strong return on equity (ROE) of 27.87% and a robust dividend yield of 40.86%, the company's performance has not kept pace with the S&P 500 over the past year, where it saw a decline of 29.32% compared to the index's gain of 10.26%. This further reinforces the notion that Advanced Drainage Systems, Inc. is currently overvalued in the market.