As of May 23, 2025, Align Technology Inc's estimated intrinsic value ranges from $91.18 to $306.05 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $306.05 | +77.3% |
| Discounted Cash Flow (5Y) | $258.48 | +49.7% |
| Dividend Discount Model (Multi-Stage) | $109.32 | -36.7% |
| Dividend Discount Model (Stable) | $99.06 | -42.6% |
| Earnings Power Value | $91.18 | -47.2% |
Is Align Technology Inc (ALGN) undervalued or overvalued?
With the current market price at $172.61, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Align Technology Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.9 | 1 |
| Cost of equity | 8.0% | 10.5% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 30.7% | 34.3% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.7% | 6.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $258 | $17,879M | 87.8% |
| 10-Year Growth | $306 | $21,362M | 78.2% |
| 5-Year EBITDA | $207 | $14,088M | 84.6% |
| 10-Year EBITDA | $239 | $16,454M | 71.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $352M |
| Discount Rate (WACC) | 6.9% - 5.7% |
| Enterprise Value | $5,125M - $6,139M |
| Net Debt | $(1,044)M |
| Equity Value | $6,169M - $7,183M |
| Outstanding Shares | 73M |
| Fair Value | $84 - $98 |
| Selected Fair Value | $91.18 |
| Metric | Value |
|---|---|
| Market Capitalization | $12637M |
| Enterprise Value | $11593M |
| Trailing P/E | 29.99 |
| Forward P/E | 25.99 |
| Trailing EV/EBITDA | 12.95 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.90 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $91.82 |
| Discounted Cash Flow (5Y) | 25% | $64.62 |
| Dividend Discount Model (Multi-Stage) | 20% | $21.86 |
| Dividend Discount Model (Stable) | 15% | $14.86 |
| Earnings Power Value | 10% | $9.12 |
| Weighted Average | 100% | $202.28 |
Based on our comprehensive valuation analysis, Align Technology Inc's weighted average intrinsic value is $202.28, which is approximately 17.2% above the current market price of $172.61.
Key investment considerations:
Given these factors, we believe Align Technology Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.