UFP Industries (NASDAQ:UFPI) vs. Advanced Drainage Systems (NYSE:WMS) Financial Contrast

Advanced Drainage Systems (NYSE:WMS) and UFP Industries (NASDAQ:UFPI) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Risk & Volatility

Advanced Drainage Systems has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, UFP Industries has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Valuation & Earnings

This table compares Advanced Drainage Systems and UFP Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advanced Drainage Systems	$3.05 billion	3.71	$426.46 million	$5.44	27.12
UFP Industries	$6.32 billion	0.82	$294.79 million	$4.36	21.17

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

Dividends

Advanced Drainage Systems pays an annual dividend of $0.80 per share and has a dividend yield of 0.5%. UFP Industries pays an annual dividend of $1.44 per share and has a dividend yield of 1.6%. Advanced Drainage Systems pays out 14.7% of its earnings in the form of a dividend. UFP Industries pays out 33.0% 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 increased its dividend for 1 consecutive years and UFP Industries has increased its dividend for 5 consecutive years. UFP Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Advanced Drainage Systems and UFP Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advanced Drainage Systems	0	2	7	0	2.78
UFP Industries	1	2	3	0	2.33

Advanced Drainage Systems presently has a consensus price target of $187.00, indicating a potential upside of 26.75%. UFP Industries has a consensus price target of $103.75, indicating a potential upside of 12.42%. Given Advanced Drainage Systems’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Advanced Drainage Systems is more favorable than UFP Industries.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Advanced Drainage Systems	13.98%	26.63%	11.80%
UFP Industries	3.99%	8.00%	6.11%

Insider and Institutional Ownership

89.8% of Advanced Drainage Systems shares are held by institutional investors. Comparatively, 81.8% of UFP Industries shares are held by institutional investors. 1.7% of Advanced Drainage Systems shares are held by insiders. Comparatively, 2.5% of UFP Industries shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Advanced Drainage Systems beats UFP Industries on 13 of the 17 factors compared between the two stocks.

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.

About UFP Industries

UFP Industries, Inc., through its subsidiaries, designs, manufactures, and markets wood and non-wood composites, and other materials in North America, Europe, Asia, and Australia. It operates through Retail, Packaging, and Construction segments. The Retail segment offers treated lumber products, including decking, fencing, lattice, and other products; pressure-treated and fire-retardant products used primarily for outdoor decking environments; and lawn and garden products, consisting of wood and vinyl fencing options, garden beds and planters, pergolas, picnic tables, and other landscaping products. This segment also offers wood plastic composites, composite decking, and related decking accessories, including non- aluminum railing systems, balusters, post caps, and other products, as well as pre-painted and primed shiplap and project boards. The Packaging segment provides custom and structural packaging products, pallets, corrugate, foam, labels, strapping, and films. The construction segment offers roof trusses, cut-to-size dimensional and board lumber, plywoods, and oriented strand boards; engineered wood components, including roof and floor trusses, wall panels, I-joists, and lumber packages; and alternate materials components, such as metal trusses, sheathed and pre-finished light gauge metal wall panels, aluminum decks, and rail accessories, as well as distributes siding, electrical, and plumbing products. This segment also engages in the manufacture of components; design, manufacture, and supply of wood forms and related products to set or form concrete for structures, such as parking garages, stadiums, and other infrastructure projects. It also offers interior fixtures, millwork, and casework for retail and commercial structures. The company was formerly known as Universal Forest Products, Inc. and changed its name to UFP Industries, Inc. in April 2020. UFP Industries, Inc. was incorporated in 1955 and is headquartered in Grand Rapids, Michigan.