Straighten Out Your Long-Term Portfolio with ALGN

Align Technology looks to break its pattern of massive volatility with upcoming earnings

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Align Technology, Inc. (NASDAQ:ALGN) is the company responsible for the increasingly popular teeth-aligning technology known as Invisalign®. The company manufactures 3D digital scanners and clear teeth aligners used by orthodontists around the world.

ALGN has experienced significant volatility over the last four years. The stock reached an all-time high of $398.88 back in fall 2018 during its initial growth spurt, before giving back approximately 50% of its value at the height of the coronavirus selloff in March. 

Today, ALGN shares are up 61% from their 52-week low of $127.88, and hold a 24% year-to-date lead.  With the current share price reaching for all-time highs, investors may be generally reluctant to buy now, but the fundamentals tell us that there is plenty of upside for ALGN stock. All of this depends on Align Technology breakings its historical pattern by impressing investors on October 21, the expected date of the company's next earnings report.

Align Technology has a market cap of $25.89 billion and a book value of $36.11 per share. The company's price-to-book ratio currently stands at 9.07. The company has a trailing twelve month price-earnings ratio of 15.31. Align also has a trailing price-earnings ratio of 15.22, and a forward price-earnings ratio of 47.39.

As far as earnings go, Align has swung and missed expectations on the last two earnings reports. The company beat expectations in the two earnings reports prior to the coronavirus pandemic. In the past recent quarterly report, Align Technologies missed their target by $0.30. They reported an earnings per share of -$0.35 instead of the expected -$0.05 Align is currently expected to report a positive earnings per share of $0.54 with its next report, and also expected to resume its upward trajectory from fourth quarter of 2019. The company touts an impressive trailing 12-month earnings per share of $21.47.

Align Technology has grown its revenue by approximately $500 million for the last four years. The company has consistently grown net income on an annual basis as well. Align is on track for a profitable 2020, despite earnings reductions from the last two quarters. Align currently has $404.36 million in cash and $71.48 million in total debt. The company’s balance sheet holds $2.5 billion in total assets and $1.16 billion in total liabilities. Align's total equity stands at $1.35 billion.

Align Technology has a lot going for it ahead of its earnings report this month, set for after after the close on Wednesday, Oct. 21. The company’s balance sheet is in a great position, and the cash in hand is over five times the amount of debt it owes. In addition, the company is likely to return to profitability after experiencing a quarter where they took a loss. In the short-term, Align is financially sound and presents promising growth despite trading rich in value at times.

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