What happened
Water management solutions aren't ordinarily the stuff of investor dreams, but that sure wasn't the case with Advanced Drainage Systems(NYSE: WMS) over the past five trading days. The stock was quite a gusher, rising by almost 13% in price across the week, according to data compiled by S&P Global Market Intelligence.
So what
The key event making ADS shareholders happy was the company's fourth-quarter earnings release. This, despite the fact that net sales decreased on a year-over-year basis by almost 9% to below $618 million. Happily for ADS and its investors, net income according to standards based on generally accepted accounting principles (GAAP) went far in the other direction, doubling and then some over the period to nearly $86 million ($1.07 per share).
Analysts tracking the stock were surely caught by surprise by the company's performance. After all, they were modeling only $567 million in revenue on average, not to mention a mere $0.79 for per-share GAAP net income.
Sweetening the pot for investors, ADS also announced a dividend raise. It's cranking its annual payout 17% higher to $0.56 per share, although it should be noted that its yield remains low despite this (at less than 0.6%).
Now what
Several of the aforementioned analysts were quick to lift their price targets on ADS stock following those smashing beats.
These raises were relatively modest, however; one example was that from UBS prognosticator John Lovallo, who added $8 per share to his level for a new price target of $102. Another cautious raiser was Baird's Michael Halloran -- he now feels the stock is valued fairly at $125, up slightly from his previous target of $120.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
