Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Align Technology Inc., FCFE calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of cash flow metrics from 2018 to 2022 reveals a period of significant volatility, characterized by a peak in 2021 followed by a substantial contraction in 2022.
- Net Cash Provided by Operating Activities
- Operating cash flows demonstrated an overall upward trajectory from 2018 through 2021, increasing from US$ 554.7 million to a peak of US$ 1.17 billion. This growth was interrupted by a slight decrease in 2020. However, a sharp reversal occurred in 2022, where operating cash flows declined by approximately 51.5% to US$ 568.7 million, effectively returning to 2018 levels.
- Free Cash Flow to Equity (FCFE)
- FCFE followed a similar pattern to operating cash flows but exhibited greater volatility. After increasing from US$ 331.4 million in 2018 to US$ 597.6 million in 2019, and recovering from a 2020 dip to a peak of US$ 771.4 million in 2021, the metric suffered a precipitous drop in 2022. FCFE decreased to US$ 276.8 million, representing a decline of approximately 64% from the previous year and falling below the initial 2018 baseline.
- Cash Flow Conversion and Capital Allocation
- The relationship between operating cash flows and FCFE indicates fluctuating levels of capital expenditure or debt financing activities. In 2019, FCFE represented approximately 80% of operating cash flow, suggesting efficient conversion. By 2022, this conversion ratio dropped to approximately 48.7%, indicating that a larger portion of operating cash was absorbed by capital expenditures or net debt repayments during that period.
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Price to FCFE Ratio, Current
Align Technology Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 76,589,114 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 276,832) |
| FCFE per share | 3.61 |
| Current share price (P) | 197.44 |
| Valuation Ratio | |
| P/FCFE | 54.62 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Abbott Laboratories | 34.00 |
| Elevance Health Inc. | 24.54 |
| Intuitive Surgical Inc. | 65.21 |
| Medtronic PLC | 31.54 |
| UnitedHealth Group Inc. | 21.10 |
| P/FCFE, Sector | |
| Health Care Equipment & Services | 16.20 |
| P/FCFE, Industry | |
| Health Care | 27.97 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Align Technology Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 76,610,319 | 78,795,494 | 79,132,723 | 78,753,161 | 79,989,347 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 276,832) | 771,446) | 507,258) | 597,563) | 331,369) | |
| FCFE per share3 | 3.61 | 9.79 | 6.41 | 7.59 | 4.14 | |
| Share price1, 4 | 304.64 | 512.56 | 567.11 | 218.35 | 258.97 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 84.31 | 52.35 | 88.47 | 28.78 | 62.51 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Abbott Laboratories | 26.11 | 24.52 | — | — | — | |
| Elevance Health Inc. | 14.26 | 11.07 | — | — | — | |
| Intuitive Surgical Inc. | 89.67 | 58.39 | — | — | — | |
| Medtronic PLC | 19.71 | 38.91 | — | — | — | |
| UnitedHealth Group Inc. | 12.57 | 20.11 | — | — | — | |
| P/FCFE, Sector | ||||||
| Health Care Equipment & Services | 16.47 | 22.14 | — | — | — | |
| P/FCFE, Industry | ||||||
| Health Care | 18.50 | 17.94 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 276,832,000 ÷ 76,610,319 = 3.61
4 Closing price as at the filing date of Align Technology Inc. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 304.64 ÷ 3.61 = 84.31
6 Click competitor name to see calculations.
The financial valuation of Align Technology Inc. from 2018 to 2022 is characterized by significant volatility in both market pricing and cash flow generation, leading to erratic fluctuations in the Price to Free Cash Flow to Equity (P/FCFE) ratio.
- Share Price Trajectory
- A substantial price escalation occurred between 2019 and 2020, where the share price rose from 218.35 US$ to a peak of 567.11 US$. This was followed by a sustained decline over the subsequent two years, ending at 304.64 US$ in 2022.
- FCFE per Share Dynamics
- Free Cash Flow to Equity per share exhibited a general upward trend from 2018 through 2021, peaking at 9.79 US$. However, this growth was reversed abruptly in 2022, with FCFE per share falling to 3.61 US$, representing a significant contraction in the company's ability to generate cash for equity holders.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio shows extreme variance, fluctuating between a low of 28.78 in 2019 and a high of 88.47 in 2020. The ratio expanded again to 84.31 in 2022; notably, this increase was driven by the collapse in FCFE per share rather than an increase in share price, indicating a valuation that became stretched relative to the underlying cash flow performance.
The observed patterns suggest a period of high market speculation in 2020, where the valuation multiplier peaked. By 2022, the convergence of a declining share price and a more severe decline in FCFE per share resulted in a high P/FCFE ratio, signaling a potential misalignment between the market's valuation and the company's actual cash flow generation capabilities.
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