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ALGN — Align Technology

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 16.59%
Profit Margins 10.5%
Return on Equity 10.82%
Return on Assets 7.33%
Free Float 0.07B
Short Int % Utilisation 7.38%

2.2 Growth

Metric Value
Revenue Growth 6.2%
Free Cash Flow 0.54B
EBITDA 12.65 (Ratio)
Enterprise Value 11.27B
EV/Revenue 2.75
EV/EBITDA 12.65

Revenue growth of 6.2% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 37.79%
Risk / Std Dev (Ann.)* 39.53%
1-Year Price Return* 27.30%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $181.31
52-Week Range $122.00 – $200.44
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $4.03B $4.00B
Net income Reported net income $410.35M $421.36M
Total assets Year-end reported balance $6.23B $6.21B
Shareholders’ equity Year-end reported balance $4.05B $3.85B
Net margin Net income ÷ revenue 10.17% 10.54%
Asset turnover Revenue ÷ total assets 0.6473x 0.6435x
Equity multiplier Total assets ÷ shareholders’ equity 1.5395x 1.6134x
ROE Net margin × asset turnover × equity multiplier 10.13% 10.94%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $4.03B
Prior annual revenue $4.00B
EBIT $585.31M
Tax rate 29.89%
NOPAT = EBIT × (1 − tax rate) $410.37M
Forecast start-growth basis 0.90%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $410.37M
Add: depreciation & amortisation $237.44M
Less: capital expenditure -$102.44M
Less/(add): working-capital cash-flow movement -$356.01M
Current unlevered FCFF $189.34M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 0.90% $414.06M $239.57M -$103.37M -$359.22M $191.05M $179.15M
2 1.30% $419.44M $242.68M -$139.20M -$363.88M $159.03M $131.13M
3 1.70% $426.57M $246.81M -$176.65M -$370.07M $126.66M $91.83M
4 2.10% $435.52M $251.99M -$216.17M -$377.84M $93.50M $59.61M
5 2.50% $446.41M $258.29M -$258.29M -$387.28M $59.13M $33.15M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.65
Cost of equity 13.80%
Pre-tax cost of debt 7.71%
WACC 13.72%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $539.93M
Implied terminal EV / EBITDA 0.60x
Terminal value as % of enterprise value 36.45%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $494.87M
Present value of terminal value $283.83M
Indicated enterprise value $778.70M
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $778.70M
Less: gross interest-bearing debt $114.45M
Add: cash and equivalents $1.09B
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $1.76B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 72,588,000.00
Share-count basis reported diluted weighted-average shares
Current market price $169.95
DCF indicative value per share $24.23
Indicative value vs. market price -85.74%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration review required
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:21:43.376018 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -13.43% 1.83%
Adjusted R² 0.36 0.41
Annualised residual volatility 31.31% 29.87%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 1.44 (7.84) 1.82 (9.01)
Size (SMB) 1.11 (4.45) 0.90 (3.52)
Value (HML) 0.19 (0.90) -0.45 (-1.78)
Profitability (RMW) NM 0.37 (1.73)
Investment (CMA) NM 1.39 (3.75)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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