As you might know, Advanced Drainage Systems, Inc. (NYSE:WMS) recently reported its third-quarter numbers. Statutory earnings per share of US$1.04 unfortunately missed expectations by 13%, although it was encouraging to see revenues of US$691m exceed expectations by 2.2%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Advanced Drainage Systems

Taking into account the latest results, the most recent consensus for Advanced Drainage Systems from seven analysts is for revenues of US$3.12b in 2026. If met, it would imply a satisfactory 6.1% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 7.0% to US$6.46. In the lead-up to this report, the analysts had been modelling revenues of US$3.12b and earnings per share (EPS) of US$6.84 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$158, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Advanced Drainage Systems at US$180 per share, while the most bearish prices it at US$135. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Advanced Drainage Systems' revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 4.8% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.0% annually. So it's pretty clear that, while Advanced Drainage Systems' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$158, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Advanced Drainage Systems. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Advanced Drainage Systems analysts - going out to 2027, and you can see them free on our platform here.

Even so, be aware that Advanced Drainage Systems is showing 1 warning sign in our investment analysis , you should know about...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.