Our analysis is based on comparing Advanced Drainage Systems, Inc. with the following peers – Raven Industries, Inc., Rogers Corporation, Proto Labs, Inc. and Dover Corporation (RAVN-US, ROG-US, PRLB-US and DOV-US).
Advanced Drainage Systems, Inc.’s dividend yield is 1.15 percent and its dividend payout is 70.27 percent. This compares to a peer average dividend yield of 1.38 percent and a payout level of 46.32 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. Supporting this is the company’s average dividend quality score of 50 out of a possible score of 100, which points to some weakness in being able to sustain the higher payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), WMS-US paid a high quality dividend, which represents a yield of 1.11% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 2 were high quality, 1 was medium quality and 2 were low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), WMS-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 5.04x), investing cash flow (coverage of -3.84x), issuance cash flow (coverage of -0.03x) and twelve-month prior cash (coverage of 0.51x), for a total dividend coverage of 1.65x.
WMS-US’s issuance cash flow includes outflows from net share buybacks (coverage of -0.38x). Thus, the total coverage including share buybacks is 2.03x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||N/A||9.3||0.49||1.4||1.39||1.15|
|Dividend Payout (%)||0||0||-21.05||51.28||48||70.27|
A complete list of metrics and analysis is available on the company page.
Advanced Drainage Systems, Inc. engages in the manufacture of thermoplastic corrugated pipe which provides suite of water management products and superior drainage solutions for use in the construction and infrastructure marketplace. It operates through the following segments: Domestic and International. The Domestic segment focuses on the manufacture and sale of products throughout the United States. The International segment concerns the manufacture and sale of products in regions outside of the United States. The company products include corrugated high density polyethylene pipe, polypropylene pipe and related water management products. Advanced Drainage Systems was founded in 1966 and is headquartered in Hilliard, OH.
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