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Align Technology (ALGN) Up 1.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Align Technology (ALGN - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Align Technology due for a pullback? 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 delivered second-quarter fiscal 2024 adjusted earnings per share of $2.41, up 8.6% from the year-ago quarter’s level. The reported figure topped the Zacks Consensus Estimate by 3.9%.
GAAP earnings per share for the quarter was $1.28 compared with $1.46 in the prior-year quarter. This reflected a decline of 12.3% year over year.
Revenues
The top line increased 2.6% year over year to $1.03 billion, but missed the Zacks Consensus Estimate by a marginal 0.9%. Revenues were unfavorably impacted by foreign exchange of approximately $18.1 million or 1.7% year over year.
Segments in Detail
The company has two reportable segments — Clear Aligner and Imaging Systems, and CAD/CAM Services (Systems and Services)
Revenues in the Clear Aligner segment were down 0.1% year over year to $831.7 million.
Clear Aligner revenues had a 1.7% unfavorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services rose 16.1% to $196.8 million in the quarter. The top line, too, witnessed an unfavorable currency impact of 1.7% year over year.
Margins
The gross profit in the second quarter was $722.6 million, up 1.3% year over year. The gross margin in the quarter under review contracted 95-basis points (bps) year over year to 70.3% on an increase of 5.9% in the cost of net revenues.
During the quarter, SG&A expenses decreased 0.2% to $452.3 million, while R&D expenses rose 4.2% to $92.2 million.
Operating income totaled $178.2 million, up 3.6% year over year. The operating margin expanded 17 bps to 17.3%.
Financial Details
Align Technology exited the second quarter with cash and cash equivalents of $761.4 million compared with $865.8 million recorded at the end of the first quarter.
The cumulative net cash provided by operating activities at the end of the second quarter was $188.5 million compared with $451.7 million in the year-ago period.
Stock Repurchase
Inthe reported quarter, Align Technology repurchased approximately 0.6 million shares in total through $150.0 million of open market repurchases.
Currently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in Jan 2023.
Guidance
Align Technology updated its financial outlook for the full year 2024 and provided third-quarter 2024 outlook.
For the full year, ALGN anticipates revenues to be up 4-6% year over year (down from the previous guidance of 6-8%). The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.12 billion, suggesting a 6.6% growth over year-ago reported figure.
The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 GAAP operating margins and the 2024 non-GAAP operating margin to be above the 2023 non-GAAP operating margin.
The company expects to invest approximately $100 million in capital expenditures, primarily related to building construction and improvements and manufacturing capacity, to support continued expansion.
For the third quarter of 2024, ALGN anticipates worldwide revenues in the range of $0.9 billion-$1 billion. The Zacks Consensus Estimate is pegged at $1.03 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.12% due to these changes.
VGM Scores
Currently, Align Technology has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 D. 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) Up 1.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Align Technology (ALGN - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Align Technology due for a pullback? 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 Tops Q2 Earnings, Gross Margin Contracts
Align Technology delivered second-quarter fiscal 2024 adjusted earnings per share of $2.41, up 8.6% from the year-ago quarter’s level. The reported figure topped the Zacks Consensus Estimate by 3.9%.
GAAP earnings per share for the quarter was $1.28 compared with $1.46 in the prior-year quarter. This reflected a decline of 12.3% year over year.
Revenues
The top line increased 2.6% year over year to $1.03 billion, but missed the Zacks Consensus Estimate by a marginal 0.9%. Revenues were unfavorably impacted by foreign exchange of approximately $18.1 million or 1.7% year over year.
Segments in Detail
The company has two reportable segments — Clear Aligner and Imaging Systems, and CAD/CAM Services (Systems and Services)
Revenues in the Clear Aligner segment were down 0.1% year over year to $831.7 million.
Clear Aligner revenues had a 1.7% unfavorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services rose 16.1% to $196.8 million in the quarter. The top line, too, witnessed an unfavorable currency impact of 1.7% year over year.
Margins
The gross profit in the second quarter was $722.6 million, up 1.3% year over year. The gross margin in the quarter under review contracted 95-basis points (bps) year over year to 70.3% on an increase of 5.9% in the cost of net revenues.
During the quarter, SG&A expenses decreased 0.2% to $452.3 million, while R&D expenses rose 4.2% to $92.2 million.
Operating income totaled $178.2 million, up 3.6% year over year. The operating margin expanded 17 bps to 17.3%.
Financial Details
Align Technology exited the second quarter with cash and cash equivalents of $761.4 million compared with $865.8 million recorded at the end of the first quarter.
The cumulative net cash provided by operating activities at the end of the second quarter was $188.5 million compared with $451.7 million in the year-ago period.
Stock Repurchase
Inthe reported quarter, Align Technology repurchased approximately 0.6 million shares in total through $150.0 million of open market repurchases.
Currently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in Jan 2023.
Guidance
Align Technology updated its financial outlook for the full year 2024 and provided third-quarter 2024 outlook.
For the full year, ALGN anticipates revenues to be up 4-6% year over year (down from the previous guidance of 6-8%). The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.12 billion, suggesting a 6.6% growth over year-ago reported figure.
The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 GAAP operating margins and the 2024 non-GAAP operating margin to be above the 2023 non-GAAP operating margin.
The company expects to invest approximately $100 million in capital expenditures, primarily related to building construction and improvements and manufacturing capacity, to support continued expansion.
For the third quarter of 2024, ALGN anticipates worldwide revenues in the range of $0.9 billion-$1 billion. The Zacks Consensus Estimate is pegged at $1.03 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.12% due to these changes.
VGM Scores
Currently, Align Technology has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 D. 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.