Is Advanced Drainage Systems, Inc. overvalued or undervalued?

As of 27 June 2025, the valuation grade for Advanced Drainage Systems, Inc. has moved from expensive to fair. The company is currently fairly valued. Key ratios include a P/E ratio of 21, an EV to EBITDA of 12.08, and a ROE of 27.87%. In comparison, peers such as Berry Global Group, Inc. have a P/E of 14.64, while Armstrong World Industries, Inc. shows a significantly higher P/E of 31.98, indicating that Advanced Drainage Systems is positioned reasonably within its competitive landscape.
Despite the recent stock performance lagging behind the S&P 500 over the past year, with a decline of 28.17% compared to the index's gain of 12.59%, the company's strong ROCE of 26.54% and high dividend yield of 40.86% suggest that it remains an attractive investment option. Overall, the combination of its valuation metrics and peer comparisons supports the conclusion that Advanced Drainage Systems, Inc. is fairly valued in the current market context.