Align Technology (ALGN) Up 1.2% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Align Technology reported mixed financial results for Q2 2024, with adjusted earnings per share increasing but revenues missing estimates, leading to a cautious outlook for the remainder of the year [2][3][9]. Financial Performance - Adjusted earnings per share for Q2 2024 were $2.41, an increase of 8.6% year over year, surpassing the Zacks Consensus Estimate by 3.9% [2] - GAAP earnings per share decreased to $1.28, down 12.3% from the previous year [2] - Total revenues rose 2.6% year over year to $1.03 billion, but fell short of the Zacks Consensus Estimate by 0.9% [3] Segment Analysis - Revenues from the Clear Aligner segment decreased by 0.1% year over year to $831.7 million, impacted by a 1.7% unfavorable foreign exchange effect [4] - Imaging Systems & CAD/CAM Services revenues increased by 16.1% to $196.8 million, also affected by a 1.7% unfavorable currency impact [4] Margins and Expenses - Gross profit for Q2 was $722.6 million, up 1.3% year over year, but gross margin contracted by 95 basis points to 70.3% due to a 5.9% increase in the cost of net revenues [5] - SG&A expenses decreased by 0.2% to $452.3 million, while R&D expenses rose by 4.2% to $92.2 million [5] - Operating income increased by 3.6% to $178.2 million, with an operating margin expansion of 17 basis points to 17.3% [5] Cash Flow and Stock Repurchase - Cash and cash equivalents at the end of Q2 were $761.4 million, down from $865.8 million at the end of Q1 [6] - The company repurchased approximately 0.6 million shares for $150 million during the quarter, with $500 million remaining under its $1 billion stock repurchase program [7][8] Guidance - For full-year 2024, Align Technology expects revenue growth of 4-6%, revised down from 6-8%, with a Zacks Consensus Estimate of $4.12 billion [9] - The company anticipates a slight decline in GAAP operating margins compared to 2023, while non-GAAP operating margins are expected to be above 2023 levels [9] - For Q3 2024, revenue guidance is set between $0.9 billion and $1 billion, with a consensus estimate of $1.03 billion [9] Estimate Trends - Consensus estimates have trended downward, with a shift of -6.12% noted over the past month [10] VGM Scores - Align Technology currently holds a poor Growth Score of F, a Momentum Score of B, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [11]