Unveiling the Investment Potential of Align Technology Inc (ALGN): A Comprehensive GF Score Analysis
Align Technology Inc (NASDAQ:ALGN) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $277.58, Align Technology Inc has witnessed a daily loss of 3.12%, marked against a three-month change of -20.83%. A thorough analysis, underlined by the GF Score, suggests that Align Technology Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Align Technology Inc's GF Score components are as follows:
Financial strength rank: 8/10
Profitability rank: 10/10
Growth rank: 10/10
GF Value rank: 8/10
Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and decent ranks in GF value and momentum, GuruFocus assigned Align Technology Inc the GF Score of 98 out of 100, which signals the highest outperformance potential.
Understanding Align Technology Inc's Business
Align Technology Inc, with a market cap of $21.24 billion and sales of $3.74 billion, is the leading manufacturer of clear aligners. Its main product, Invisalign, approved by the FDA in 1998, controls over 90% of the market. Invisalign can treat roughly 90% of all malocclusion cases (misaligned teeth), and there are over 230,000 Invisalign-trained dentists and orthodontists. In 2022, Invisalign treated over 2 million cases, or roughly 10% of all orthodontic cases for the year, and it has treated over 14 million patients since its launch. Align also sells intraoral scanners under the brand iTero, which captures digital impressions of patients' teeth and illustrates treatment plans. Over 85% of Invisalign cases are submitted by digital scans and iTero scans make up over half of these scans.
Financial Strength Breakdown
According to the Financial Strength rating, Align Technology Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 6.79, Align Technology Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.04, Align Technology Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Align Technology Inc's impressive standing among its peers in generating profit. Align Technology Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Align Technology Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 16.6%, which outperforms better than 70.56% of 727 companies in the Medical Devices & Instruments industry. Moreover, Align Technology Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 10.3, and the rate over the past five years is 17.8. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Align Technology Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
