Comparing Masco (NYSE:MAS) and Advanced Drainage Systems (NYSE:WMS)

Masco (NYSE:MAS) and Advanced Drainage Systems (NYSE:WMS) are both large-cap construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Masco	10.90%	815.20%	16.32%
Advanced Drainage Systems	15.75%	27.72%	12.31%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Masco	$7.68 billion	1.88	$810.00 million	$4.03	17.78
Advanced Drainage Systems	$2.99 billion	3.89	$450.17 million	$6.01	24.84

Masco has higher revenue and earnings than Advanced Drainage Systems. Masco 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.

Analyst Ratings

This is a summary of current ratings and target prices for Masco and Advanced Drainage Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Masco	1	12	7	0	2.30
Advanced Drainage Systems	0	1	7	0	2.88

Masco currently has a consensus target price of $80.07, suggesting a potential upside of 11.76%. Advanced Drainage Systems has a consensus target price of $190.29, suggesting a potential upside of 27.46%. Given Advanced Drainage Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Advanced Drainage Systems is more favorable than Masco.

Volatility & Risk

Masco has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Advanced Drainage Systems has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Dividends

Masco pays an annual dividend of $1.28 per share and has a dividend yield of 1.8%. Advanced Drainage Systems pays an annual dividend of $0.72 per share and has a dividend yield of 0.5%. Masco pays out 31.8% of its earnings in the form of a dividend. Advanced Drainage Systems pays out 12.0% 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. Masco has increased its dividend for 12 consecutive years and Advanced Drainage Systems has increased its dividend for 1 consecutive years. Masco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

93.9% of Masco shares are owned by institutional investors. Comparatively, 89.8% of Advanced Drainage Systems shares are owned by institutional investors. 0.6% of Masco shares are owned by company insiders. Comparatively, 1.6% of Advanced Drainage Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Advanced Drainage Systems beats Masco on 9 of the 16 factors compared between the two stocks.

About Masco

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company's Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, sinks, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; connected water products; thermoplastic solutions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products. This segment provides its products under the DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, KRAUS, EASY DRAIN, STEAMIST, ELITESTEAM, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, COBRA PRO, and MASTER PLUMBER brands. Its Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products, as well as paint applicators and accessories; cabinet and door hardware, functional hardware, wall plates, hook and rail products, closet organization systems, and picture hanging accessories; decorative bath hardware, mirrors, and shower accessories and doors; and decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. This segment provides its products under the BEHR, KILZ, WHIZZ, Elder & Jenks, LIBERTY, BRAINERD, FRANKLIN BRASS, KICHLER, and ÉLAN brands. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Masco Corporation was incorporated in 1929 and is headquartered in Livonia, Michigan.

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.