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Align Technology (ALGN) Q1 Earnings: A Beat in the Cards?
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We expect Align Technology, Inc. (ALGN - Free Report) to beat expectations when it reports first-quarter fiscal 2017 results, after the market closes on Apr 27.
Last quarter, the company’s earnings met the Zacks Consensus Estimate of 67 cents. However, in the last four quarters, Align Technology earnings outpaced the Zacks Consensus Estimate at an average of 20.23%. Let’s see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Align Technology is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Align Technology has an Earnings ESP of +4.48% as the Most Accurate estimate is pegged at 70 cents while the Zacks Consensus Estimate is at 67 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Align Technology currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Align Technology’s Zacks Rank #2 and +4.48% ESP makes us reasonably confident of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
We are optimistic about Align Technology’s execution of strategic initiatives like international expansion, ortho utilization of Invisalign particularly targeting the teen market, helping GPs to expand their patient base, ensuring Invisalign treatment for a growing base of patients.
Within the teen market, Align Technology recently announced Invisalign Teen with mandibular advancement, the first clear aligner solution for Class II correction in growing teen and tween patients. According to the company, this advancement will help the company offer increased teen treatment which can further boost the performance in the yet-to-be reported quarter.
In terms of utilization, during the last reported quarter, North American Invisalign volumes increased 5.7% on customer base expansion and increased utilization of both customer channels.
The company is continuously investing in research and technology and making innovation in Invisalign treatment for worldwide customers. As a result, the level of clinical confidence among consumers is increasing globally.
In the last quarter, the company launched Invisalign G7, the latest version of Invisalign that can fine tune particular tooth movement. The latest product comprises an upgraded version of a ClinCheck Pro. Further, the company has upgraded the iTero Element scanner and the Invisalign Outcome Simulator chairside app, adding 3D progress tracking to assess Invisalign treatment advancement.
The company had also shifted the order acquisition operations (digital scanning of the cemented TBS impression) to the EMEA region last year. This has helped the company lower cost of goods sold as order acquisition has a low labor and training component in this region. We expect this to boost the bottom line from the first quarter itself.
On the flip side, unfavorable currency movement continues to be a dampener. On a constant currency basis, Align Technology’s fourth-quarter revenues declined by approximately $3 million, both sequentially and on a year-over-year basis as a result of foreign exchange rate fluctuations and the strengthening of the U.S. dollar. This might affect the yet-to-be-reported quarter’s result as well.
Also acomparative analysis of Align Technology’s forward P/E (F12M basis) multiple over the last three months reflects a relatively gloomy picture. The stock’s valuation looks stretched when compared to its industry. The company currently trades at a P/E ratio of 37.68, which is overvalued in comparison to the Zacks categorized Medical Products Industry’s P/E (F12M basis) multiple of 16.98. In fact, a comparison of the company’s current P/E level with its own range (median of 33.42) shows that the stock is a little overvalued. Even when compared to the market at large, the stock looks overvalued, as the P/E for the S&P 500 is 17.97.
Other Stocks to Consider
Here are some other companies you may consider as our model shows that they also have the right combination of elements to post an earnings beat in the upcoming quarter:
Anthem, Inc. has an Earnings ESP of +7.79% and a Zacks Rank #2.
Preferred Bank (PFBC - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Align Technology (ALGN) Q1 Earnings: A Beat in the Cards?
We expect Align Technology, Inc. (ALGN - Free Report) to beat expectations when it reports first-quarter fiscal 2017 results, after the market closes on Apr 27.
Last quarter, the company’s earnings met the Zacks Consensus Estimate of 67 cents. However, in the last four quarters, Align Technology earnings outpaced the Zacks Consensus Estimate at an average of 20.23%. Let’s see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Align Technology is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Align Technology has an Earnings ESP of +4.48% as the Most Accurate estimate is pegged at 70 cents while the Zacks Consensus Estimate is at 67 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Align Technology currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. Price and EPS Surprise | Align Technology, Inc. Quote
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Align Technology’s Zacks Rank #2 and +4.48% ESP makes us reasonably confident of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
We are optimistic about Align Technology’s execution of strategic initiatives like international expansion, ortho utilization of Invisalign particularly targeting the teen market, helping GPs to expand their patient base, ensuring Invisalign treatment for a growing base of patients.
Within the teen market, Align Technology recently announced Invisalign Teen with mandibular advancement, the first clear aligner solution for Class II correction in growing teen and tween patients. According to the company, this advancement will help the company offer increased teen treatment which can further boost the performance in the yet-to-be reported quarter.
In terms of utilization, during the last reported quarter, North American Invisalign volumes increased 5.7% on customer base expansion and increased utilization of both customer channels.
The company is continuously investing in research and technology and making innovation in Invisalign treatment for worldwide customers. As a result, the level of clinical confidence among consumers is increasing globally.
In the last quarter, the company launched Invisalign G7, the latest version of Invisalign that can fine tune particular tooth movement. The latest product comprises an upgraded version of a ClinCheck Pro. Further, the company has upgraded the iTero Element scanner and the Invisalign Outcome Simulator chairside app, adding 3D progress tracking to assess Invisalign treatment advancement.
The company had also shifted the order acquisition operations (digital scanning of the cemented TBS impression) to the EMEA region last year. This has helped the company lower cost of goods sold as order acquisition has a low labor and training component in this region. We expect this to boost the bottom line from the first quarter itself.
On the flip side, unfavorable currency movement continues to be a dampener. On a constant currency basis, Align Technology’s fourth-quarter revenues declined by approximately $3 million, both sequentially and on a year-over-year basis as a result of foreign exchange rate fluctuations and the strengthening of the U.S. dollar. This might affect the yet-to-be-reported quarter’s result as well.
Also acomparative analysis of Align Technology’s forward P/E (F12M basis) multiple over the last three months reflects a relatively gloomy picture. The stock’s valuation looks stretched when compared to its industry. The company currently trades at a P/E ratio of 37.68, which is overvalued in comparison to the Zacks categorized Medical Products Industry’s P/E (F12M basis) multiple of 16.98. In fact, a comparison of the company’s current P/E level with its own range (median of 33.42) shows that the stock is a little overvalued. Even when compared to the market at large, the stock looks overvalued, as the P/E for the S&P 500 is 17.97.
Other Stocks to Consider
Here are some other companies you may consider as our model shows that they also have the right combination of elements to post an earnings beat in the upcoming quarter:
Adidas AG (ADDYY - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Anthem, Inc. has an Earnings ESP of +7.79% and a Zacks Rank #2.
Preferred Bank (PFBC - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>