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With so much uncertainty about the industrials space, it is fair to sum up Advanced Drainage Systems against current market trends. As expected, Advanced Drainage is starting to reaffirm its true potential as retail investors are becoming more and more confident in the future outlook. Lots of the inclinations of the company stock price movements has been a rough manifestation of what is happening in the market overall. Invariable basic indicators of the enterprise may also connote signals of long-running gains for Advanced retail investors. Advanced Drainage is scheduled to announce its earnings today. The next earnings report is expected on the 5th of November 2020.
Published over a month ago
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Is Advanced (NYSE:WMS) outlook still optimistic?
Advanced Drainage's average rating is Buy from 6 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on Advanced Drainage market sentiment investors' perception of the future value of Advanced. Let us look at a few aspects of Advanced technical analysis.

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

Closer look at Advanced Drainage Mean Deviation

Advanced Drainage Systems has current Mean Deviation of 2.12. The mean deviation of the equity instrument is the first measure of the distances between each value of security historical prices and the mean. It gives us an idea of how spread out from the center the distribution of returns.

Mean Deviation is the average of the absolute values of the differences between price distribution numbers and their mean. Mean deviation of equity instrument with a lot of historical data is a biased estimator because the time horizon used in calculation will always be much smaller than the entire price history of the equity. The mean deviation is typically used as a measure of dispersion for small investment horizon, otherwise standard deviation is a better measure of dispersion.

Mean Deviation 
 = 
SUM(RET DEV) 
 = 
2.12
SUM = Summation notation
RET DEV = Sum of return deviations of Advanced Drainage
N = Number of calculation points for selected time horizon
Let's now compare Advanced Drainage Mean Deviation to its closest peers:
WMS
DKILY
CARR
CODGF
MAS
WMS2.121419067033976
DKILY1.28
CARR2.86
CODGF2.01
MAS1.41

Our perspective of the latest Advanced Drainage spike

The maximum drawdown is down to 16.91 as of today. As of the 6th of August, Advanced Drainage shows the Downside Deviation of 2.92, mean deviation of 2.12, and Risk Adjusted Performance of 0.2312. In respect to fundamental indicators, the technical analysis model gives you tools to check existing technical drivers of Advanced Drainage, as well as the relationship between them. Put another way, you can use this information to find out if the firm will indeed mirror its model of historical prices and volume momentum, or the prices will eventually revert. We were able to interpolate nineteen technical drivers for Advanced Drainage Systems, which can be compared to its rivals. Please confirm Advanced Drainage standard deviation, as well as the relationship between the value at risk and kurtosis to decide if Advanced Drainage is priced correctly, providing market reflects its regular price of 53.06 per share. Given that Advanced Drainage has jensen alpha of 0.1157, we suggest you to validate Advanced Drainage Systems's prevailing market performance to make sure the company can sustain itself at a future point.

The Bottom Line

While other companies within the building products & equipment industry are still a little expensive, even after the recent corrections, Advanced Drainage may offer a potential longer-term growth to retail investors. While some retail investors may not share our view we believe it may be a good time to exit Advanced as the risk-reward trade off is not appealing enough to hold a position. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Advanced Drainage.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Advanced Drainage Systems. Please refer to our Terms of Use for any information regarding our disclosure principles.

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