Advanced Story

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WMS -- USA Stock  

USD 60.86  0.49  0.81%

24% of stocks are less volatile than Advanced, and above 94% of all equities are expected to generate higher returns over the next 60 days. While some risk-seeking retail investors are getting worried about industrials space, it is reasonable to sum up Advanced Drainage Systems as a possible investment alternative. We will evaluate if Advanced Drainage's current volatility will continue into September.
Published over a month ago
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Is Advanced Drainage (NYSE:WMS) a good hedge for your existing portfolios?
Advanced Drainage has 1.19 B in debt with debt to equity (D/E) ratio of 1.47, which is OK given its current industry classification. The entity has a current ratio of 2.74, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due.
Volatility is a rate at which the price of Advanced Drainage or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Advanced Drainage may increase or decrease. In other words, similar to Advanced's beta indicator, it measures the risk of Advanced Drainage and helps estimate the fluctuations that may happen in a short period of time. So if prices of Advanced Drainage fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is Advanced Drainage's Liquidity

Advanced Drainage financial leverage refers to using borrowed capital as a funding source to finance Advanced Drainage Systems ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Advanced Drainage financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Advanced Drainage's total debt and its cash.

How Advanced utilizes its cash?

To perform a cash flow analysis of Advanced Drainage, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Advanced Drainage is receiving and how much cash it distributes out in a given period. The Advanced Drainage cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Advanced Drainage Net Cash Flow from Operations is relatively stable at the moment as compared to the past year. Advanced Drainage reported last year Net Cash Flow from Operations of 306.19 Million

Advanced Drainage Volatility Drivers

Advanced Drainage unsystematic risk is unique to Advanced Drainage and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Advanced Drainage you can also buy Nibe Industrier Ab. You can also mitigate this risk by investing in the building products & equipment sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Advanced Drainage important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Advanced Drainage income statement and balance sheet. Here are more details about Advanced volatility.
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