What happened

Shares of pipe maker Advanced Drainage Systems (WMS 2.13%) were up 8.8% through 11:15 a.m. ET on Thursday after the company reported a big earnings beat this morning.

Analysts had forecast that the infrastructure company would earn $0.77 per share on $562.8 million in sales in its fiscal 2023 fourth quarter. In fact, it earned $1.06 per share, and sales were $617.6 million.  

So what

Not all the news was great. Although sales exceeded expectations, Advanced Drainage Systems' revenue still fell 9% year over year. Nevertheless, earnings nearly doubled as the company's cost of goods sold plummeted, and management whittled away at operating costs.

To put that weak quarterly sales number in perspective, however, for the full fiscal year, sales were up a respectable 11% at $3.1 billion. Profits nearly doubled for the year (as well as the quarter), rising 93% to $6.08 per share.

Now what

So fiscal 2023 was a good year for Advanced Drainage Systems. Now what about fiscal 2024?

Well, sad to say things aren't looking quite as bright for this fiscal year ahead. Management is forecasting full-year sales of somewhere between $2.6 billion and $2.8 billion. At the midpoint, that implies about a 13% slowdown in sales this year.

Management said that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a non-GAAP number that doesn't really tell an investor much that's useful -- will range from $725 million to $825 million. For what it's worth, though, analysts are forecasting $5.43 per share in profit this year, which implies an 11% decline -- roughly in line with management's forecast for sales declining.

That still leaves the stock trading for only 17.7 times forward earnings. But with earnings on the downturn now, I'd still hesitate to call that a bargain price.