It's been a great morning session for Align Technology investors, who saw their shares rise 7.3% to a price of $142.56 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Align Technology's Valuation Is in Line With Its Sector Averages:
Align Technology, Inc. provides Invisalign clear aligners, Vivera retainers, and iTero intraoral scanners and services in the United States, Switzerland, and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Align Technology has a trailing 12 month P/E ratio of 27.6 and a P/B ratio of 2.6.
Align Technology has moved -40.7% over the last year compared to 10.3% for the S&P 500 — a difference of -51.0%. Align Technology has a 52 week high of $246.19 and a 52 week low of $122.0.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,407 | $2,472 | $3,953 | $3,735 | $3,862 | $3,999 |
| Gross Margins | 72% | 71% | 74% | 71% | 70% | 70% |
| Net Margins | 18% | 72% | 20% | 10% | 12% | 11% |
| Net Income (M) | $443 | $1,776 | $772 | $362 | $445 | $421 |
| Net Interest Expense (M) | $12 | $3 | $3 | $5 | $17 | $20 |
| Depreciation & Amort. (M) | $79 | $94 | $109 | $126 | $142 | $126 |
| Diluted Shares (M) | 80 | 79 | 80 | 78 | 77 | 75 |
| Earnings Per Share | $5.53 | $22.41 | $9.69 | $4.61 | $5.81 | $5.62 |
| EPS Growth | n/a | 305.24% | -56.76% | -52.43% | 26.03% | -3.27% |
| Avg. Price | $249.39 | $305.72 | $617.52 | $391.45 | $274.0 | $142.56 |
| P/E Ratio | 44.77 | 13.56 | 63.14 | 84.73 | 47.08 | 25.32 |
| Free Cash Flow (M) | $598 | $507 | $771 | $277 | $608 | $623 |
| CAPEX (M) | $150 | $155 | $401 | $292 | $178 | $116 |
| Current Ratio | 1.68 | 1.4 | 1.3 | 1.26 | 1.18 | 1.22 |
Align Technology has rapidly growing revenues and decreasing reinvestment in the business, wider gross margins than its peer group, and generally positive cash flows. However, the firm has EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Align Technology has just enough current assets to cover current liabilities, as shown by its current ratio of 1.22.
