Align Technology Inc (NASDAQ: ALGN)

Sector: Healthcare Industry: Medical Instruments & Supplies CIK: 0001097149
Market Cap 12.65 Bn
P/B 3.20
P/E 33.42
P/S 3.18
ROIC (Qtr) 7.96
Div Yield % 0.00
Rev 1y % (Qtr) 1.82
Total Debt (Qtr) 87.28 Mn
Debt/Equity (Qtr) 0.02

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 656.12M provides robust 7.52x coverage of total debt 87.28M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 5.64B provides 64.66x coverage of total debt 87.28M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 566.63M exceeds capital expenditure of 89.49M by 6.33x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 5.64B provides 9.94x coverage of working capital 567.63M, indicating strong operational backing.
  • Operating cash flow of 656.12M provides strong 2.88x coverage of inventory 228.16M, indicating efficient inventory management.

Bear case

  • Operating cash flow of 656.12M barely covers its investment activities of (130.44M), with a coverage ratio of -5.03, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (130.44M) provide weak support for R&D spending of 381.75M, which is -0.34x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 656.12M provides insufficient coverage of deferred revenue obligations of 1.29B, which is 0.51x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 656.12M shows concerning coverage of stock compensation expenses of 180.43M, with a 3.64 ratio indicating potential earnings quality issues.
  • High receivables of 1.10B relative to inventory of 228.16M (4.82 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Medical Instruments & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ISRG Intuitive Surgical Inc 209.14 Bn 76.14 21.76 0.00 Bn
2 BDX Becton Dickinson & Co 58.36 Bn 34.78 2.67 19.18 Bn
3 ALC Alcon Inc 39.57 Bn 37.80 3.89 5.24 Bn
4 RMD Resmed Inc 37.01 Bn 25.74 7.04 0.85 Bn
5 WST West Pharmaceutical Services Inc 19.95 Bn 40.58 6.61 0.30 Bn
6 HOLX Hologic Inc 16.94 Bn 29.95 4.13 2.52 Bn
7 COO Cooper Companies, Inc. 16.64 Bn 44.39 4.07 2.51 Bn
8 SOLV Solventum Corp 15.00 Bn 9.84 1.79 5.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.90 3.14
EV to Cash from Ops. EV/CFO 18.04 37.60
EV to Debt EV to Debt 135.61 23.10
EV to EBIT EV/EBIT 21.54 50.25
EV to EBITDA EV/EBITDA 15.83 19.58
EV to Free Cash Flow [EV/FCF] EV/FCF 20.89 -19.40
EV to Market Cap EV to Market Cap 0.94 -1.68
EV to Revenue EV/Rev 2.97 171.31
Price to Book Value [P/B] P/B 3.20 6.03
Price to Earnings [P/E] P/E 33.42 204.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -1.11
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 1.52
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.75
Interest Coverage Int. cover (Qtr) 0.00 -119.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 28.99 -55.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.58 200.65
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -1.49
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.31 -56.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -8.10 -106.80
EBIT Growth (1y) % EBIT 1y % (Qtr) -14.29 -36.51
EBT Growth (1y) % EBT 1y % (Qtr) -14.29 -47.44
EPS Growth (1y) % EPS 1y % (Qtr) -11.77 -15.70
FCF Growth (1y) % FCF 1y % (Qtr) 51.91 59.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.71 68.22
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.64 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.51 2.49
Current Ratio Curr Ratio (Qtr) 1.29 7.77
Debt to Equity Ratio Debt/Equity (Qtr) 0.02 0.55
Interest Cover Ratio Int Coverage (Qtr) 0.00 -119.10
Times Interest Earned Times Interest Earned (Qtr) 0.00 -119.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.10 -2,368.64
EBIT Margin % EBIT Margin % (Qtr) 13.80 -2,472.65
EBT Margin % EBT Margin % (Qtr) 13.80 -2,442.59
Gross Margin % Gross Margin % (Qtr) 68.40 30.07
Net Profit Margin % Net Margin % (Qtr) 9.50 -2,438.52