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Align Technology (ALGN) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Axis Capital (AXS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Align Technology (ALGN) closed at $293.08 in the latest trading session, marking a +1.18% move from the prior day. This change outpaced the S&P 500's 0.66% gain on the day. Elsewhere, the Dow gained 1.03%, while the tech-heavy Nasdaq added 0.46%.

Heading into today, shares of the maker of the Invisalign tooth-straightening system had gained 16.99% over the past month, outpacing the Medical sector's loss of 0.8% and the S&P 500's gain of 3.97% in that time.

Investors will be hoping for strength from ALGN as it approaches its next earnings release, which is expected to be April 24, 2019. On that day, ALGN is projected to report earnings of $0.83 per share, which would represent a year-over-year decline of 29.06%. Our most recent consensus estimate is calling for quarterly revenue of $530.19 million, up 21.35% from the year-ago period.

ALGN's full-year Zacks Consensus Estimates are calling for earnings of $5.08 per share and revenue of $2.43 billion. These results would represent year-over-year changes of +3.25% and +23.72%, respectively.

It is also important to note the recent changes to analyst estimates for ALGN. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ALGN is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note ALGN's current valuation metrics, including its Forward P/E ratio of 56.99. This valuation marks a premium compared to its industry's average Forward P/E of 21.85.

Also, we should mention that ALGN has a PEG ratio of 2.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Medical - Dental Supplies stocks are, on average, holding a PEG ratio of 2.27 based on yesterday's closing prices.

The Medical - Dental Supplies industry is part of the Medical sector. This group has a Zacks Industry Rank of 97, putting it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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