What happened?
Shares of water management company Advanced Drainage Systems (NYSE: WMS) fell 11.4% in the morning session after the company reported third-quarter 2026 financial results that missed Wall Street's revenue expectations and lowered its full-year guidance.
According to a company press release, Advanced Drainage reported net sales of $889.4 million, representing 4.6% year-over-year growth, and reduced its full-year revenue guidance to $3.35 billion at the midpoint. However, quarterly revenue missed Wall Street estimates of $925.7 million by 3.9%, while the updated annual sales outlook fell 3.1% below expectations.
The company also projected full-year adjusted EBITDA of $1.02 billion at the midpoint, trailing analyst forecasts of $1.05 billion. These shortfalls overshadowed quarterly adjusted earnings of $1.88 per share, which beat consensus estimates of $1.79.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Advanced Drainage? Access our full analysis report here, it’s free.
What is the market telling us
Advanced Drainage’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Advanced Drainage and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 7.5% on the news that geopolitical tensions in the Middle East escalated, sent oil prices soaring and reignited inflation concerns.
Advanced Drainage is down 15.7% since the beginning of the year, and at $126.24 per share, it is trading 28% below its 52-week high of $175.38 from February 2026. Despite the year-to-date decline, investors who bought $1,000 worth of Advanced Drainage’s shares 5 years ago would now be looking at an investment worth $1,019.
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