Align Technology, Inc. Fundamental Analysis (NASDAQ: ALGN)
Align Technology, Inc. (NASDAQ: ALGN) shows weak financial fundamentals with a PE ratio of 30.41, profit margin of 9.99%, and ROE of 13.60%. The company generates $4.1B in annual revenue with weak year-over-year growth of 0.90%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 63.7/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze ALGN's fundamental strength across five key dimensions:
Efficiency Score
ExcellentALGN demonstrates superior asset utilization.
Valuation Score
ModerateALGN shows balanced valuation metrics.
Growth Score
WeakALGN faces weak or negative growth trends.
Financial Health Score
ExcellentALGN maintains a strong and stable balance sheet.
Profitability Score
WeakALGN struggles to sustain strong margins.
Key Financial Metrics
Is ALGN Expensive or Cheap?
P/E Ratio
ALGN trades at 30.41 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, ALGN's PEG of -10.61 indicates potential undervaluation.
Price to Book
The market values Align Technology, Inc. at 2957.03 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 15.95 times EBITDA. This signals the market has high growth expectations.
How Well Does ALGN Make Money?
Net Profit Margin
For every $100 in sales, Align Technology, Inc. keeps $9.99 as profit after all expenses.
Operating Margin
Core operations generate 13.33 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $13.60 in profit for every $100 of shareholder equity.
ROA
Align Technology, Inc. generates $64.44 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Align Technology, Inc. produces operating cash flow of $757.37M, showing steady but balanced cash generation.
Free Cash Flow
Align Technology, Inc. generates strong free cash flow of $757.37M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $10.58 in free cash annually.
FCF Yield
ALGN converts 6.03% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
30.41
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-10.61
vs 25 benchmark
P/B Ratio
Price to book value ratio
2957.03
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.03
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.03
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.40
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.14
vs 25 benchmark
ROA
Return on assets percentage
64.44
vs 25 benchmark
ROCE
Return on capital employed
122.39
vs 25 benchmark
How ALGN Stacks Against Its Sector Peers
| Metric | ALGN Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 30.41 | 31.50 | Neutral |
| ROE | 13.60% | 422.00% | Weak |
| Net Margin | 9.99% | 19867.00% | Weak |
| Debt/Equity | 0.03 | 0.53 | Strong (Low Leverage) |
| Current Ratio | 1.40 | 5.56 | Neutral |
| ROA | 6444.45% | 1571.00% | Excellent |
ALGN outperforms its industry in 2 out of 6 key metrics, particularly excelling in ROA, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Align Technology, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
77.22%
Industry Style: Defensive, Growth, Innovation
High GrowthEPS CAGR
-74.91%
Industry Style: Defensive, Growth, Innovation
DecliningFCF CAGR
-2.73%
Industry Style: Defensive, Growth, Innovation
Declining