NASDAQ:ALGN, a growth stock which is not overvalued.

Discover ALIGN TECHNOLOGY INC (NASDAQ:ALGN), an undervalued growth gem identified by our stock screener. NASDAQ:ALGN is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Analyzing Growth Metrics

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:ALGN has achieved a 7 out of 10:

• ALGN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 27.77%, which is quite impressive.
• Measured over the past years, ALGN shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.86% on average per year.
• The Revenue has been growing by 14.45% on average over the past years. This is quite good.
• ALGN is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.50% yearly.
• Based on estimates for the next years, ALGN will show a quite strong growth in Revenue. The Revenue will grow by 10.49% on average per year.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

Understanding NASDAQ:ALGN's Valuation

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:ALGN has earned a 5 for valuation:

• Based on the Price/Earnings ratio, ALGN is valued cheaply inside the industry as 82.89% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of ALGN indicates a rather cheap valuation: ALGN is cheaper than 82.35% of the companies listed in the same industry.
• Based on the Enterprise Value to EBITDA ratio, ALGN is valued a bit cheaper than the industry average as 79.68% of the companies are valued more expensively.
• Based on the Price/Free Cash Flow ratio, ALGN is valued cheaper than 80.75% of the companies in the same industry.
• The excellent profitability rating of ALGN may justify a higher PE ratio.
• ALGN's earnings are expected to grow with 13.32% in the coming years. This may justify a more expensive valuation.

Health Examination for NASDAQ:ALGN

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:ALGN, the assigned 8 reflects its health status:

• ALGN has an Altman-Z score of 5.88. This indicates that ALGN is financially healthy and has little risk of bankruptcy at the moment.
• The Altman-Z score of ALGN (5.88) is better than 81.82% of its industry peers.
• There is no outstanding debt for ALGN. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• ALGN does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Understanding NASDAQ:ALGN's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:ALGN has achieved a 8:

• ALGN has a better Return On Assets (7.26%) than 87.70% of its industry peers.
• ALGN's Return On Equity of 11.90% is amongst the best of the industry. ALGN outperforms 86.63% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 10.77%, ALGN belongs to the top of the industry, outperforming 91.98% of the companies in the same industry.
• Measured over the past 3 years, the Average Return On Invested Capital for ALGN is above the industry average of 8.32%.
• ALGN has a Profit Margin of 11.34%. This is amongst the best in the industry. ALGN outperforms 85.56% of its industry peers.
• With an excellent Operating Margin value of 17.33%, ALGN belongs to the best of the industry, outperforming 88.77% of the companies in the same industry.
• ALGN has a better Gross Margin (69.82%) than 81.28% of its industry peers.

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For an up to date full fundamental analysis you can check the fundamental report of ALGN

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.