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Align Technology (ALGN) Down 5.1% Since Last Earnings Report: Can It Rebound?
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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 5.1% 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 catalysts.
Align Technology Q4 Earnings Top Estimates, Margins Down
Align Technology, Inc.’s fourth-quarter 2021 earnings per share was $2.83, up from the year-ago $2.61, reflecting an improvement of 8.4%. The quarter’s earnings per share surpassed the Zacks Consensus Estimate by 6.4%.
GAAP earnings per share for the quarter was $2.40, up from the year-ago earnings per share of $2.00, reflecting an uptick of 20%.
Full-year adjusted earnings per share was $11.22, reflecting a 113.7% increase from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 1.2%.
Full-year GAAP earnings per share was $9.69, reflecting a 56.8% fall from the year-ago period.
Revenues
Revenues surged 23.6% year over year to $1.03 billion in the quarter, beating the Zacks Consensus Estimate by 1.4%.
Full-year revenues were $3.95 billion, reflecting a 59.9% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 0.3%.
Segments in Detail
In the fourth quarter, revenues at the Clear Aligner segment rose 16.4% year over year to $815.3 million with strong revenue growth across all regions and the portfolio, including comprehensive and non-comprehensive products as well as Invisalign. Within the segment, Invisalign case shipments amounted to 631,145, up 11.1% year over year.
During the quarter, Clear Aligner volumes rose 11.5% and 10.7% year over year in the Americas and International regions, respectively. Clear Aligner volume for teenage patients rose 13% year over year.
Revenues from Imaging Systems & CAD/CAM Services surged 61.3% to $215.8 million in the quarter due to product mix, and increased services revenues from the company’s larger installed base and exocad's CAD/CAM services. Sequentially, the company’s revenues recorded an uptick of 21%. The company continues to gain traction for iTero Element 5D Plus imaging system across all regions, with the most recent launch in China in the fourth quarter.
Margins
Gross profit in the fourth quarter was $744.6 million, reflecting an improvement of 21.9% year over year. Gross margin in the quarter under review contracted 94 basis points (bps) year over year to 72.2% on a 27.9% uptick in cost of net revenues.
During the quarter, Align Technology witnessed a 29.5% year-over-year increase in selling, general and administrative expenses to $451.2 million and a 48.3% rise in research and development expenses to $72.5 million.
Operating income in the quarter under review was $220.9 million compared with operating profit of $213.2 million year over year, indicating an uptick of 3.6%. The operating margin contracted 412 bps to 21.4%.
Financial Details
Align Technology exited 2021 with cash, cash equivalents of $1.09 billion compared with $960.8 million recorded at the end of 2020.
Cumulative net cash provided by operating activities at the end of the year was $1.17 billion compared with $662.2 million a year ago.
Under the $1-billion repurchase program announced in May 2021, the company has $725 million remaining available for the repurchase of common stock.
Guidance
Align Technology has provided its financial outlook for 2022, assuming no new notable surges post the current wave, no significant practice disruptions, and no material supply chain problems throughout the year.
The company expects net revenue growth in the band of 20-30% despite the challenges posed by the Omicron variant. The Zacks Consensus Estimate for 2022 revenues is pegged at $4.76 billion.
The company expects 2022 operating margin to be about 24% on a GAAP basis. Meanwhile, adjusted operating margin is estimated at around 3 points higher than the GAAP operating margin, excluding stock-based compensation and intangible amortization from certain acquisitions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -21.21% due to these changes.
VGM Scores
At this time, Align Technology has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Align Technology has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Align Technology (ALGN) Down 5.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Align Technology (ALGN - Free Report) . Shares have lost about 5.1% 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 catalysts.
Align Technology Q4 Earnings Top Estimates, Margins Down
Align Technology, Inc.’s fourth-quarter 2021 earnings per share was $2.83, up from the year-ago $2.61, reflecting an improvement of 8.4%. The quarter’s earnings per share surpassed the Zacks Consensus Estimate by 6.4%.
GAAP earnings per share for the quarter was $2.40, up from the year-ago earnings per share of $2.00, reflecting an uptick of 20%.
Full-year adjusted earnings per share was $11.22, reflecting a 113.7% increase from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 1.2%.
Full-year GAAP earnings per share was $9.69, reflecting a 56.8% fall from the year-ago period.
Revenues
Revenues surged 23.6% year over year to $1.03 billion in the quarter, beating the Zacks Consensus Estimate by 1.4%.
Full-year revenues were $3.95 billion, reflecting a 59.9% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 0.3%.
Segments in Detail
In the fourth quarter, revenues at the Clear Aligner segment rose 16.4% year over year to $815.3 million with strong revenue growth across all regions and the portfolio, including comprehensive and non-comprehensive products as well as Invisalign. Within the segment, Invisalign case shipments amounted to 631,145, up 11.1% year over year.
During the quarter, Clear Aligner volumes rose 11.5% and 10.7% year over year in the Americas and International regions, respectively. Clear Aligner volume for teenage patients rose 13% year over year.
Revenues from Imaging Systems & CAD/CAM Services surged 61.3% to $215.8 million in the quarter due to product mix, and increased services revenues from the company’s larger installed base and exocad's CAD/CAM services. Sequentially, the company’s revenues recorded an uptick of 21%. The company continues to gain traction for iTero Element 5D Plus imaging system across all regions, with the most recent launch in China in the fourth quarter.
Margins
Gross profit in the fourth quarter was $744.6 million, reflecting an improvement of 21.9% year over year. Gross margin in the quarter under review contracted 94 basis points (bps) year over year to 72.2% on a 27.9% uptick in cost of net revenues.
During the quarter, Align Technology witnessed a 29.5% year-over-year increase in selling, general and administrative expenses to $451.2 million and a 48.3% rise in research and development expenses to $72.5 million.
Operating income in the quarter under review was $220.9 million compared with operating profit of $213.2 million year over year, indicating an uptick of 3.6%. The operating margin contracted 412 bps to 21.4%.
Financial Details
Align Technology exited 2021 with cash, cash equivalents of $1.09 billion compared with $960.8 million recorded at the end of 2020.
Cumulative net cash provided by operating activities at the end of the year was $1.17 billion compared with $662.2 million a year ago.
Under the $1-billion repurchase program announced in May 2021, the company has $725 million remaining available for the repurchase of common stock.
Guidance
Align Technology has provided its financial outlook for 2022, assuming no new notable surges post the current wave, no significant practice disruptions, and no material supply chain problems throughout the year.
The company expects net revenue growth in the band of 20-30% despite the challenges posed by the Omicron variant. The Zacks Consensus Estimate for 2022 revenues is pegged at $4.76 billion.
The company expects 2022 operating margin to be about 24% on a GAAP basis. Meanwhile, adjusted operating margin is estimated at around 3 points higher than the GAAP operating margin, excluding stock-based compensation and intangible amortization from certain acquisitions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -21.21% due to these changes.
VGM Scores
At this time, Align Technology has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Align Technology has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.