Advanced Drainage Systems falls 14.9% after quarterly results

What happened

Advanced Drainage Systems (WMS) fell 14.9% on November 5, 2026, after it reported fiscal second quarter results that drove investors to sell. The stock closed at $122.63, opened 14.8% below the previous close and traded at 3.7 times its 20-day average as volume surged. Business Wire and Seeking Alpha reported the company issued an earnings release and held an earnings call on the same day.

How big was the move

The drop was large by the stock's recent norms: it was 5.1 times a typical daily move for this stock and 11.5 percentage points worse than the Basic Materials sector median on the day. The S&P 500 fell 4.4% on November 5, 2026, and fell 4.7% over five sessions; Advanced Drainage Systems fell 10.2% over the last five sessions. With a beta of 1.28, the stock tends to move more than the market, amplifying index swings into larger share-price moves.

The technical picture

Technically, the stock sat below key moving averages. It was 6.2% below its 20-day moving average, 5.9% below its 50-day moving average and 14.3% below its 200-day moving average. The 50-day average is below the 200-day average, a sign of a weak longer-term trend, and the stock was 31.6% below the 52-week high. The Relative Strength Index (14 days) stood at 40, in a neutral range, while volatility measured 46% annualized over 60 days, higher than 75% of its own readings over five years.

Fundamentals and valuation

For the four quarters through September 30, 2026, Advanced Drainage Systems reported revenue of $3.26 billion, which grew 9.2% from a year earlier. Diluted earnings per share for that period were $5.26, though earnings per share for the most recent quarter fell 10.2% from a year earlier. Gross margin was 37.4% (a year earlier: 38.1%) and operating margin was 21.9% (a year earlier: 22.5%). Free-cash-flow margin stood at 16.3% and return on invested capital was 14.4%.

The balance sheet showed net debt of 1.8 times EBITDA and the company's share count over one year decreased by 3.2%. On valuation measures, the stock traded at 23.3 times trailing earnings and 19.6 times expected earnings, with a free-cash-flow yield of 5.2%. Its price to trailing earnings was lower than 52% of its own readings over the past five years (five-year median: 24.1 times earnings) and market value stood at $10.21 billion on the session date.

Taken together, the company displayed solid cash generation and a modestly higher leverage metric, while earnings momentum showed strain versus a year earlier. Investors weighed that mix against a valuation that is roughly in line with its recent history.

Earnings and analyst expectations

The company reported quarterly earnings per share of $1.88 on November 5, 2026, against $1.81 expected, 3.9% above estimates. The result was down from $1.97 a year earlier. Advanced Drainage Systems has beaten estimates in six consecutive quarters, with an average surprise over the last four reports of 12.8% above estimates. Typical two-day reactions after recent reports were rose 1.7%.

Analysts' consensus rating was Buy, based on 23 analysts with a consensus price target of $188.20, which is 53.5% above the closing price on the day of the drop. Forty-three percent of those analysts rate the stock Buy or Strong Buy. PromtFinance scores ranked the company with strong Quality at 88, positive Revisions at 76 and weaker Momentum at 29.

Investors also factored a shareholder-friendly move announced the same day: the Board declared a quarterly cash dividend of $0.20 per share, an 11% increase compared with the prior year. That dividend increase came amid mixed near-term earnings momentum, which likely helped explain the sharp intraday reaction.

What to watch

• November 5, 2026: earnings per share of $1.88 against $1.81 expected, 3.9% above estimates, reported by Business Wire and Seeking Alpha
• February 4, 2027: next earnings report date
• Board action: quarterly cash dividend of $0.20 per share, an 11% increase from the prior year
• Valuation measures: 23.3 times trailing earnings and a price to forward earnings of 19.6 times expected earnings
• Technical levels: 31.6% below the 52-week high and 14.3% below its 200-day moving average