Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.
As of today (2024-05-05), the stock price of Align Technology is $287.87. Align Technology's graham number for the quarter that ended in Mar. 2024 was $92.08. Therefore, Align Technology's Price to Graham Number ratio for today is 3.13.
The historical rank and industry rank for Align Technology's Graham Number or its related term are showing as below:
ALGN'
s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.28 Med: 3.98 Max: 11.3
Current: 3.13
During the past 13 years, the highest Price to Graham Number ratio of Align Technology was 11.30. The lowest was 1.28. And the median was 3.98.
ALGN's Price-to-Graham-Number is ranked worse than 72.15% of 377
companies
in the Medical Devices & Instruments industry
Industry Median: 1.83
vs ALGN: 3.13
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
Align Technology Graham Number Historical Data
The historical data trend for Align Technology's Graham Number can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Align Technology's Graham Number
For the Medical Devices subindustry, Align Technology's Price-to-Graham-Number, along with its competitors' market caps and Price-to-Graham-Number data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Align Technology's Price-to-Graham-Number Distribution in the Medical Devices & Instruments Industry
For the Medical Devices & Instruments industry and Healthcare sector, Align Technology's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Align Technology's Price-to-Graham-Number falls into.
Align Technology Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
Align Technology's Graham Number for the fiscal year that ended in Dec. 2023 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Align Technology (NAS:ALGN) Graham Number Explanation
Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:
Current price should not be more than 15 times average earnings of the past three years.
Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)
Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.
In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.
Align Technology's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Mar. 2024 )
=
287.87
/
92.08
=
3.13
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Be Aware
Please keep these in mind:
1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.
Align Technology Graham Number Related Terms
Thank you for viewing the detailed overview of Align Technology's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
Align Technology (Align Technology) Business Description
Align Technology is the leading manufacturer of clear aligners. Invisalign, its main product, was approved by the FDA in 1998, and it has since dominated, controlling over 90% of the market. Invisalign can treat roughly 90% of all malocclusion cases (misaligned teeth), and there are over 230,000 Invisalign-trained dentists and orthodontists. In 2022, Invisalign treated over 2 million cases, or roughly 10% of all orthodontic cases for the year, and it has treated over 14 million patients since its launch. Align also sells intraoral scanners under the brand iTero, which captures digital impressions of patients' teeth and illustrates treatment plans. Over 85% of Invisalign cases are submitted by digital scans and iTero scans make up over half of these scans.
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