Is Advanced Drainage Systems, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Advanced Drainage Systems, Inc. moved from expensive to fair, indicating a more favorable assessment of its market position. The company appears fairly valued based on its current metrics, with a P/E ratio of 21, an EV to EBITDA ratio of 12.08, and a Price to Book Value of 5.73. In comparison to peers, Brady Corp. has a P/E of 21.28, while Armstrong World Industries, Inc. shows a significantly higher P/E of 38.74, suggesting that Advanced Drainage Systems is competitively priced within its industry.
Notably, the company's return performance has been mixed; while it has outperformed the S&P 500 year-to-date with a return of 25.14% compared to 12.22%, it has lagged over the past year with a decline of 3.06% versus the S&P's gain of 17.14%. This mixed performance, combined with its fair valuation, suggests that while the stock may not be a bargain, it is positioned reasonably within its market context.