Head-To-Head Comparison: Arcosa (NYSE:ACA) & Advanced Drainage Systems (NYSE:WMS)

Arcosa (NYSE:ACA) and Advanced Drainage Systems (NYSE:WMS) are both construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Profitability

This table compares Arcosa and Advanced Drainage Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arcosa	3.45%	6.25%	3.19%
Advanced Drainage Systems	14.82%	29.57%	12.23%

Earnings & Valuation

This table compares Arcosa and Advanced Drainage Systems”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcosa	$2.57 billion	1.83	$93.70 million	$1.88	50.88
Advanced Drainage Systems	$2.90 billion	3.83	$450.17 million	$5.54	25.84

Advanced Drainage Systems has higher revenue and earnings than Arcosa. Advanced Drainage Systems is trading at a lower price-to-earnings ratio than Arcosa, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

90.7% of Arcosa shares are held by institutional investors. Comparatively, 89.8% of Advanced Drainage Systems shares are held by institutional investors. 1.2% of Arcosa shares are held by company insiders. Comparatively, 1.6% of Advanced Drainage Systems shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Arcosa has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Advanced Drainage Systems has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Arcosa and Advanced Drainage Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcosa	0	0	3	0	3.00
Advanced Drainage Systems	0	1	7	0	2.88

Arcosa currently has a consensus price target of $112.00, suggesting a potential upside of 17.09%. Advanced Drainage Systems has a consensus price target of $152.56, suggesting a potential upside of 6.58%. Given Arcosa’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Arcosa is more favorable than Advanced Drainage Systems.

Dividends

Arcosa pays an annual dividend of $0.20 per share and has a dividend yield of 0.2%. Advanced Drainage Systems pays an annual dividend of $0.72 per share and has a dividend yield of 0.5%. Arcosa pays out 10.6% of its earnings in the form of a dividend. Advanced Drainage Systems pays out 13.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Advanced Drainage Systems has raised its dividend for 1 consecutive years. Advanced Drainage Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Advanced Drainage Systems beats Arcosa on 12 of the 17 factors compared between the two stocks.

About Arcosa

Arcosa, Inc., together with its subsidiaries, provides infrastructure-related products and solutions for the construction, engineered structures, and transportation markets in the United States. It operates through three segments: Construction Products, Engineered Structures, and Transportation Products. The Construction Products segment offers natural and recycled aggregates; specialty materials; and construction site support equipment, including trench shields and shoring products for residential and non-residential construction, and specialty/other products, as well as for infrastructure construction. The Engineered Structures segment offers utility structures, wind towers, traffic structures, and telecommunication structures for electricity transmission and distribution, wind power generation, highway road construction, and wireless communication markets. The Transportation Products segment offers inland barges, fiberglass barge covers, winches, marine hardware, and steel components for railcars and transportation equipment; cast components for industrial and mining sectors; and axles, circular forgings, and coupling devices for freight, tank, locomotive, and passenger rail transportation equipment, as well as other industrial uses. Arcosa, Inc. was incorporated in 2018 and is headquartered in Dallas, Texas.

About Advanced Drainage Systems

Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products in North America and internationally. The company operates through Pipe, International, Infiltrator, and Allied Products & Other segments. It offers single, double, and triple wall corrugated polypropylene and polyethylene pipes; plastic leachfield chambers and systems; EZflow synthetic aggregate bundles; wastewater purification through mechanical aeration wastewater for residential and commercial systems; septic tanks and accessories; combined treatment and dispersal systems, including advanced enviro-septic and advanced treatment leachfield systems; and allied products, including storm retention/detention and septic chambers, polyvinyl chloride drainage structures, fittings, and water quality filters and separators. The company also purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage, as well as drainage grates and other products. In addition, it provides PVC hubs, rubber sleeves, and stainless-steel bands. The company offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of distribution centers. Advanced Drainage Systems, Inc. incorporated in 1966 and is headquartered in Hilliard, Ohio.