ALGN - Embedded Expectations Analysis - 2019 08 28
Align Technology, Inc. (ALGN:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 27.2x Uniform P/E, implying bearish expectations for the firm. However, management is confident about their growth, EPS, and exposure among Chinese patients.Specifically, management is confident their teenage promotion is driving trial and adoption in the teen segment, and they are confident tweens are their fastest growing demographic segment. Moreover, they are confident their exposure to China is driving their exposure to an overall broader group of patients, and they are confident the sale of their equity investment in SmileDirectClub generated a $15.8mn gain in the quarter. Furthermore, they are confident their Q2 EPS grew 100% sequentially and 30% over the prior year, and they are confident they are not changing their Q3 guidance.
Align Technology is a medical device company engaged in the design, manufacture and marketing of Invisalign? clear aligners and iTero? intraoral scanners and services for orthodontics, restorative and aesthetic dentistry. The company's segments are: Clear Aligner, which includes the Invisalign System, a method for treating malocclusion based on a proprietary computer-simulated virtual treatment plan and a series of doctor-prescribed, custom manufactured, clear plastic, removable aligners; and Scanners and Services, which includes Intraoral scanning that enables the dental practitioner to create a 3D image of the patient's teeth (digital scan) using a handheld intraoral scanner.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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