Why Is Align Technology (ALGN) Up 5.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Align Technology (ALGN). Shares have added about 5.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers. Align Technology's Q3 Earnings Top Estimates, Revenues MissAlign Technologydelivered third-quarter 2024 adjusted earnings per share of $2.35, up 9.8% from the year-ago level. The reported figure topped the Zacks Consensus Estimate by 1.7%.GAAP earnings per share for the quarter was $1.55, reflecting a decline of 1.9% from $1.58 in the comparable period of 2023. ALGN's Q3 RevenuesThe top line increased 1.8% year over year to $977.9 million but missed the Zacks Consensus Estimate by 1.3%. Revenues were unfavorably impacted by foreign exchange of approximately $14.6 million or 1.5% year over year.ALGN's Segments in DetailRevenues in the Clear Aligner segment declined 1% year over year to $786.8 million. Clear Aligner revenues had a 1.5% unfavorable foreign exchange impact.Revenues from Imaging Systems & CAD/CAM Services rose 15.6% to $191 million in the reported quarter. The top line, too, witnessed an unfavorable currency impact of 1.5% year over year.MarginsGross profit in the quarter was $681.8 million, up 2.8% year over year. The gross margin expanded 67 basis points (bps) year over year to 69.7% due to a decrease of 0.3% in the cost of net revenues.SG&A expenses increased 6.4% to $434.1 million, while R&D expenses declined 3.9% to $85.3 million.Operating income totaled $162.4 million, down 2.3% year over year. The operating margin contracted 72 bps to 16.6%.Financial Details of ALGN The company exited the third quEarter with cash and cash equivalents of $1 billion compared with $738.9 million recorded at the end of the second quarter. The cumulative net cash provided by operating activities at the end of the third quarter was $452.1 million compared with $738.9 million in the year-ago period.  Stock RepurchaseCurrently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in January 2023.ALGN's GuidanceAlign Technology maintained its financial outlook for full-year 2024. It also provided a guidance for the fourth quarter.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 $4.04 billion, suggesting 4.5% growth year over year.The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 level. The 2024 non-GAAP operating margin is likely to be above the prior-year reported figure. The company expects to invest more than $100 million in capital expenditures, primarily related to building construction and improvements as well as manufacturing capacity, to support continued expansion.For the fourth quarter, ALGN anticipates worldwide revenues to be in the range of $995-$1.01 billion. The Zacks Consensus Estimate is pegged at $1.02 billion.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.VGM ScoresAt this time, Align Technology has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates 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.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks