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Why Is Align Technology (ALGN) Down 15.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Align Technology (ALGN - Free Report) . Shares have lost about 15.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Align Technology due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Align Technology Beats on Q4 Earnings, Margins Up
Align Technology’s fourth-quarter 2020 earnings per share was $2.61, up from the year-ago earnings per share of $1.76, reflecting an improvement of 48.3%. The quarter’s earnings per share surpassed the Zacks Consensus Estimate by 21.9%. Significantly better-than-expected revenues of Invisalign Clear Aligners and iTero scanners during the fourth quarter despite the COVID-19 pandemic resulted in the bottom-line beat.
GAAP earnings per share for the quarter was $2.00, up from the year-ago earnings per share of $1.53, reflecting an uptick of 30.7%.
Full-year adjusted earnings per share was $5.25, reflecting a 12.1% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 12.2%.
Full-year GAAP earnings per share was $22.41, reflecting a stupendous surge of 305.2% from the year-ago period.
Revenues
Revenues surged 28.4% year over year to $834.5 million in the quarter, beating the Zacks Consensus Estimate by 6.1%.
Full-year revenues were $2.47 billion, reflecting a 2.7% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 2.1%.
Segments in Detail
In the fourth quarter, revenues at the Clear Aligner segment rose 28.9% year over year to $700.7 million due to volume increase across geographies. Within the segment, Invisalign case shipments amounted to 567.9 thousand, up 37.3% year over year.
During the quarter, Clear Aligner volumes were up 34.1% and 41.1% year over year in the Americas and International regions, respectively. In Latin America, the growth was led by Mexico and Brazil, whereas the international business was driven by EMEA and APAC.
Clear Aligner volume for teenage patients was 160.9 thousand cases, up 38.7% year over year. In terms of products performance, the company recorded strong growth across the Invisalign portfolio, especially for non-comprehensive cases including Invisalign Go and Invisalign Moderate. Also, growth was registered with Invisalign First for treatment of younger kids, which drove increased comprehensive treatments within the North American orthodontic channel. Increased utilization in the general practitioner dentist channel was witnessed with Invisalign Go and the continued adoption of Moderate.
Revenues from Imaging Systems & CAD/CAM Services surged 26% to $133.8 million in the quarter due to strong growth in EMEA and APAC. Sequentially, the company’s revenues recorded an uptick of 18%, driven by momentum in the Americas and EMEA. The company also recorded continued momentum with the iTero Element 5D Imaging System, with strength in all regions with significant Element Flex sales in EMEA.
Margins
Gross profit in the fourth quarter was $610.5 million, reflecting an improvement of 29.3% year over year. Gross margin in the quarter under review expanded 52 basis points (bps) year over year to 73.2% despite a 25.9% uptick in cost of net revenues.
During the quarter, Align Technology witnessed a 24.7% year-over-year increase in selling, general and administrative expenses to $348.4 million and a 18.3% rise in research and development expenses to $48.9 million.
Operating income in the quarter under review was $213.2 million compared with operating profit of $151.2 million year over year, indicating an uptick of 41%. The operating margin expanded 228 bps to 25.5%.
Financial Details
Align Technology exited 2020 with cash, cash equivalents and short-term marketable securities of $960.8 million compared with $868.6 million recorded at the end of 2019.
Cumulative net cash provided by operating activities at the end of the year was $662.2 million compared with $747.3 million a year ago.
The company currently has approximately $100 million left under its May 2018 repurchase program.
Guidance
The uncertainties regarding the duration and impact of the coronavirus pandemic on the company’s overall business have compelled Align Technology to refrain from providing any guidance for 2021. However, the company is optimistic about maintaining its strong momentum in business in the coming months.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 12.19% due to these changes.
VGM Scores
Currently, Align Technology has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Align Technology has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Align Technology (ALGN) Down 15.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Align Technology (ALGN - Free Report) . Shares have lost about 15.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Align Technology due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Align Technology Beats on Q4 Earnings, Margins Up
Align Technology’s fourth-quarter 2020 earnings per share was $2.61, up from the year-ago earnings per share of $1.76, reflecting an improvement of 48.3%. The quarter’s earnings per share surpassed the Zacks Consensus Estimate by 21.9%. Significantly better-than-expected revenues of Invisalign Clear Aligners and iTero scanners during the fourth quarter despite the COVID-19 pandemic resulted in the bottom-line beat.
GAAP earnings per share for the quarter was $2.00, up from the year-ago earnings per share of $1.53, reflecting an uptick of 30.7%.
Full-year adjusted earnings per share was $5.25, reflecting a 12.1% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 12.2%.
Full-year GAAP earnings per share was $22.41, reflecting a stupendous surge of 305.2% from the year-ago period.
Revenues
Revenues surged 28.4% year over year to $834.5 million in the quarter, beating the Zacks Consensus Estimate by 6.1%.
Full-year revenues were $2.47 billion, reflecting a 2.7% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 2.1%.
Segments in Detail
In the fourth quarter, revenues at the Clear Aligner segment rose 28.9% year over year to $700.7 million due to volume increase across geographies. Within the segment, Invisalign case shipments amounted to 567.9 thousand, up 37.3% year over year.
During the quarter, Clear Aligner volumes were up 34.1% and 41.1% year over year in the Americas and International regions, respectively. In Latin America, the growth was led by Mexico and Brazil, whereas the international business was driven by EMEA and APAC.
Clear Aligner volume for teenage patients was 160.9 thousand cases, up 38.7% year over year. In terms of products performance, the company recorded strong growth across the Invisalign portfolio, especially for non-comprehensive cases including Invisalign Go and Invisalign Moderate. Also, growth was registered with Invisalign First for treatment of younger kids, which drove increased comprehensive treatments within the North American orthodontic channel. Increased utilization in the general practitioner dentist channel was witnessed with Invisalign Go and the continued adoption of Moderate.
Revenues from Imaging Systems & CAD/CAM Services surged 26% to $133.8 million in the quarter due to strong growth in EMEA and APAC. Sequentially, the company’s revenues recorded an uptick of 18%, driven by momentum in the Americas and EMEA. The company also recorded continued momentum with the iTero Element 5D Imaging System, with strength in all regions with significant Element Flex sales in EMEA.
Margins
Gross profit in the fourth quarter was $610.5 million, reflecting an improvement of 29.3% year over year. Gross margin in the quarter under review expanded 52 basis points (bps) year over year to 73.2% despite a 25.9% uptick in cost of net revenues.
During the quarter, Align Technology witnessed a 24.7% year-over-year increase in selling, general and administrative expenses to $348.4 million and a 18.3% rise in research and development expenses to $48.9 million.
Operating income in the quarter under review was $213.2 million compared with operating profit of $151.2 million year over year, indicating an uptick of 41%. The operating margin expanded 228 bps to 25.5%.
Financial Details
Align Technology exited 2020 with cash, cash equivalents and short-term marketable securities of $960.8 million compared with $868.6 million recorded at the end of 2019.
Cumulative net cash provided by operating activities at the end of the year was $662.2 million compared with $747.3 million a year ago.
The company currently has approximately $100 million left under its May 2018 repurchase program.
Guidance
The uncertainties regarding the duration and impact of the coronavirus pandemic on the company’s overall business have compelled Align Technology to refrain from providing any guidance for 2021. However, the company is optimistic about maintaining its strong momentum in business in the coming months.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 12.19% due to these changes.
VGM Scores
Currently, Align Technology has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Align Technology has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.