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Why Is Align Technology (ALGN) Down 0.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Align Technology (ALGN - Free Report) . Shares have lost about 0.6% 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 Earnings Fall Shy of Estimates in Q2
Align Technology second-quarter 2020 loss per share was 35 cents, reflecting a sharp decline from year-ago earnings per share of $1.49. The quarter’s loss was wider than the Zacks Consensus Estimate of a loss of a penny. The significantly lower-than-expected revenues of Invisalign Clear Aligners and iTero scanners during the second quarter due to the COVID-19 pandemic resulted in the bottom-line miss.
Revenues declined 41.3% year over year to $352.3 million in the quarter but beat the Zacks Consensus Estimate by 1.9%.
Segments in Detail
In the second quarter, revenues at the Clear Aligner segment fell 39.9% year over year to $298.3 million due to volume decline across most regions. Within the segment, Invisalign case shipments amounted to 221.9 thousand, down 38.3% year over year.
The segment was driven by APAC, which was partially offset by North America and EMEA and Latin America. The segment also affected by foreign exchange fluctuations of approximately $6 million.
During the quarter, Invisalign volumes were down 52.2% and down 27.1% year over year in the Americas and International regions, respectively.
Invisalign volume for teenage patients was 70.6 thousand cases, down 31.9% year over year. The teen market recorded growth from APAC across comprehensive products. However, on an overall basis, both non comprehensive and comprehensive shipments declined but with increased adoption of the company’s moderate product among the orthodontic portfolio.
Revenues from CAD/CAM Services declined 48.1% to $54 million in the quarter due to COVID-19-led sales decline in most regions, except APAC. Revenues from the exocad Global Holdings GmbH (a global CAD/CAM software leader) partially offset promotional discounts and lower service revenue.
Margins
Gross margin in the quarter under review contracted 829 basis points (bps) year over year to 63.7% despite a 24% decline in cost of net revenues.
During the quarter, Align Technology witnessed a 4.1% year-over-year decrease in selling, general and administrative expenses to $256.9 million and a 3.9% rise in research and development expenses to $40.4 million.
Operating loss in the quarter under review was $73 million compared with operating profit of $125.5 million year over year.
Financial Details
At the end of the second quarter, Align Technology had cash, cash equivalents and short-term marketable securities of $404.4 million compared with $790.1 million at the end of the first quarter of 2020.
Cumulative net cash provided by operating activities was $69.7 million at the end of the second quarter compared with $294.6 million in the year-ago period.
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 the third quarter of 2020.
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 -19.07% due to these changes.
VGM Scores
At this time, Align Technology has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. Notably, Align Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Align Technology (ALGN) Down 0.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Align Technology (ALGN - Free Report) . Shares have lost about 0.6% 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 Earnings Fall Shy of Estimates in Q2
Align Technology second-quarter 2020 loss per share was 35 cents, reflecting a sharp decline from year-ago earnings per share of $1.49. The quarter’s loss was wider than the Zacks Consensus Estimate of a loss of a penny. The significantly lower-than-expected revenues of Invisalign Clear Aligners and iTero scanners during the second quarter due to the COVID-19 pandemic resulted in the bottom-line miss.
Revenues declined 41.3% year over year to $352.3 million in the quarter but beat the Zacks Consensus Estimate by 1.9%.
Segments in Detail
In the second quarter, revenues at the Clear Aligner segment fell 39.9% year over year to $298.3 million due to volume decline across most regions. Within the segment, Invisalign case shipments amounted to 221.9 thousand, down 38.3% year over year.
The segment was driven by APAC, which was partially offset by North America and EMEA and Latin America. The segment also affected by foreign exchange fluctuations of approximately $6 million.
During the quarter, Invisalign volumes were down 52.2% and down 27.1% year over year in the Americas and International regions, respectively.
Invisalign volume for teenage patients was 70.6 thousand cases, down 31.9% year over year. The teen market recorded growth from APAC across comprehensive products. However, on an overall basis, both non comprehensive and comprehensive shipments declined but with increased adoption of the company’s moderate product among the orthodontic portfolio.
Revenues from CAD/CAM Services declined 48.1% to $54 million in the quarter due to COVID-19-led sales decline in most regions, except APAC. Revenues from the exocad Global Holdings GmbH (a global CAD/CAM software leader) partially offset promotional discounts and lower service revenue.
Margins
Gross margin in the quarter under review contracted 829 basis points (bps) year over year to 63.7% despite a 24% decline in cost of net revenues.
During the quarter, Align Technology witnessed a 4.1% year-over-year decrease in selling, general and administrative expenses to $256.9 million and a 3.9% rise in research and development expenses to $40.4 million.
Operating loss in the quarter under review was $73 million compared with operating profit of $125.5 million year over year.
Financial Details
At the end of the second quarter, Align Technology had cash, cash equivalents and short-term marketable securities of $404.4 million compared with $790.1 million at the end of the first quarter of 2020.
Cumulative net cash provided by operating activities was $69.7 million at the end of the second quarter compared with $294.6 million in the year-ago period.
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 the third quarter of 2020.
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 -19.07% due to these changes.
VGM Scores
At this time, Align Technology has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. Notably, Align Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.