Advanced Beneish M Score

WMS Stock  USD 92.79  6.35  7.35%   
This module uses fundamental data of Advanced Drainage to approximate the value of its Beneish M Score. Advanced Drainage M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Advanced Drainage Piotroski F Score and Advanced Drainage Altman Z Score analysis.
  
Advanced Drainage Total Debt is relatively stable at the moment as compared to the past year. Advanced Drainage reported last year Total Debt of 381.71 Million. As of 02/04/2023, Debt Current is likely to grow to about 53.5 M, while Issuance Repayment of Debt Securities is likely to drop (80.8 M). Advanced Drainage Revenue to Assets are relatively stable at the moment as compared to the past year. Advanced Drainage reported last year Revenue to Assets of 1.20. As of 02/04/2023, Total Assets Per Share is likely to grow to 45.60, while Receivables Turnover is likely to drop 7.92.
At this time, it appears that Advanced Drainage Systems is an unlikely manipulator. The earnings manipulation may begin if Advanced Drainage's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Advanced Drainage executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Advanced Drainage's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.52
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.86Focus
Asset QualityN/AFocus
Expense Coverage0.84Focus
Gross Margin Strengs0.9Focus
Accruals Factor0.84Focus
Depreciation Resistance1.0Focus
Net Sales Growth1.08Focus
Financial Leverage Condition0.78Focus

Advanced Drainage Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Advanced Drainage's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense147.1 M162.9 M
Moderately Down
Up
Slightly volatile
Revenues2.7 B2.5 B
Significantly Up
Up
Slightly volatile
Trade and Non Trade Receivables155.5 M168.2 M
Significantly Down
Up
Slightly volatile
Property Plant and Equipment Net334.3 M352.6 M
Notably Down
Up
Slightly volatile
Operating Income403.3 M373.8 M
Significantly Up
Up
Slightly volatile
Net Cash Flow from Operations200 M247.4 M
Significantly Down
Up
Slightly volatile
Liabilities Non Current433.8 M423.8 M
Fairly Up
Down
Very volatile
Current Liabilities286.5 M352.1 M
Significantly Down
Up
Slightly volatile
Total Liabilities1.1 B1.4 B
Significantly Down
Up
Slightly volatile
Gross Margin23.3326.01
Moderately Down
Up
Slightly volatile
Depreciation Amortization and Accretion60.5 M63.9 M
Notably Down
Up
Slightly volatile
Debt Non Current345.3 M332.1 M
Sufficiently Up
Down
Pretty Stable
Debt Current53.5 M49.6 M
Significantly Up
Up
Slightly volatile
Total Debt383.6 M381.7 M
Slightly Up
Up
Pretty Stable
Assets Non Current522.6 M538 M
Fairly Down
Up
Slightly volatile
Current Assets638.1 M784.7 M
Significantly Down
Up
Slightly volatile
Total Assets2.6 B2.4 B
Significantly Up
Up
Slightly volatile

Advanced Drainage Systems Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Advanced Drainage's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Advanced Drainage in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Advanced Drainage's degree of accounting gimmicks and manipulations.

About Advanced Drainage Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

152.16 Million

Advanced Drainage Operating Expenses is relatively stable at the moment as compared to the past year. Advanced Drainage reported last year Operating Expenses of 171.92 Million

Advanced Drainage Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Advanced Drainage. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201820192020202120222023 (projected)
Revenues1.38 B1.67 B1.98 B2.77 B2.49 B2.69 B
Total Assets1.04 B2.37 B2.41 B2.65 B2.38 B2.57 B
Current Assets466.51 M666.21 M742.98 M871.9 M784.71 M638.1 M
Total Liabilities555.51 M1.6 B1.36 B1.56 B1.41 B1.13 B
Current Liabilities206.28 M238.21 M318.27 M391.24 M352.12 M286.46 M
Operating Income133.06 M(90.01 M)348.8 M415.32 M373.78 M403.29 M
Gross Margin23.6118.9134.828.926.0123.33

About Advanced Drainage Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Advanced Drainage Systems's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Advanced Drainage using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Advanced Drainage Systems based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products, and drainage solutions for use in the underground construction and infrastructure marketplace in the United States, Canada, Mexico, and internationally. The company was incorporated in 1966 and is headquartered in Hilliard, Ohio. Advanced Drainage operates under Building Products Equipment classification in the United States and is traded on New York Stock Exchange. It employs 5635 people.

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Is Advanced Drainage's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Advanced Drainage. If investors know Advanced will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Advanced Drainage listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
1.045
Market Capitalization
7.6 B
Quarterly Revenue Growth
0.252
Return On Assets
0.1538
Return On Equity
0.4648
The market value of Advanced Drainage Systems is measured differently than its book value, which is the value of Advanced that is recorded on the company's balance sheet. Investors also form their own opinion of Advanced Drainage's value that differs from its market value or its book value, called intrinsic value, which is Advanced Drainage's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Advanced Drainage's market value can be influenced by many factors that don't directly affect Advanced Drainage's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Advanced Drainage's value and its price as these two are different measures arrived at by different means. Investors typically determine Advanced Drainage value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Advanced Drainage's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.