Strong Gross Profit Margin
Low Debt Levels
Strong Operating and Net Profit Margins
Good Return on Equity
Strong Interest Coverage
Adequate Liquidity Ratios
Strong Revenue Growth
Market Leadership and Innovation
Healthy Financial Metrics
Innovative Product Launches
Growth in Emerging Markets
Positive Adoption Trends
High P/E Ratio
Elevated Price-to-Sales Ratio
Low Cash Ratio
Pressure on ASPs
Operating Margin Decline
Macro Economic Challenges
Foreign Exchange Risks
Overall, Align Technology shows strong business quality with significant revenue growth and a solid market position, but faces challenges with ASP pressure and operating margins. The future looks promising with innovative products and potential growth in emerging markets, although macroeconomic uncertainties and foreign exchange risks pose challenges.
Analysis Date: February 5, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$70.78
Current Market Price: $151.02
IV/P Ratio: 0.47x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-112.99999999999999%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ALGN
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (27.11)
P/B ratio ≤ 1.5 (2.97)
Current ratio ≥ 2.0 (1.22x)
Long-term debt < Net current assets (0.19x)
Margin of safety (-112.99999999999999%)
ALGN does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With operating and net profit margins of 15.97% and 10.54% respectively, ALGN demonstrates effective cost management and profitability.
The return on equity (ROE) of 11.01% shows that the company is generating a solid return on shareholders' equity.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
11.01%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.67%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
70.27%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
10.54%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 150.26 indicates that ALGN can easily cover its interest obligations, showcasing strong financial health.
Current and quick ratios of approximately 1.22 and 1.10 respectively suggest that ALGN has sufficient short-term assets to cover its liabilities.
The cash ratio of 0.51 indicates that while ALGN is liquid, it does not have as much cash on hand relative to its current liabilities compared to its peers.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.02x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.22x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
ALGN reported a year-over-year revenue increase of 4% in Q4 2024, with significant contributions from both Systems and Services, which grew by 14.9%, and Clear Aligner volumes up 6.1%. This indicates a solid demand for ALGN's products.
The company has a strong market position with 272,000 active Invisalign trained practitioners and over 19.5 million Invisalign patients. Their focus on innovation, such as the iTero Lumina scanner and the Invisalign Palatal Expander, enhances their competitive edge.
ALGN ended the year with a solid cash position of over $1 billion and no debt, allowing flexibility for investments and shareholder returns.
The average selling price (ASP) for Clear Aligners decreased due to unfavorable foreign exchange impacts and product mix shifts, which could affect profitability.
Despite overall growth, the operating margin decreased year-over-year, indicating pressure on profitability amidst rising operational costs.
The introduction of new products like the iTero Lumina with restorative capabilities and the commercialization of the Invisalign Palatal Expander are expected to drive future growth.
ALGN's growth in regions like Latin America and APAC, particularly in emerging markets, suggests substantial future revenue potential.
The continued increase in the number of doctors submitting cases and the record number of teen and kids starting treatment with Invisalign indicate a growing market demand.
The overall orthodontic market has been flat, and ALGN expects low single-digit revenue growth in 2025, reflecting potential challenges in a muted macro environment.
The company faces a 2-point headwind from unfavorable foreign exchange rates, which could pressure future revenue and margins.