Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin14.5%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin10.2%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
A
Years to Pay Off Debt0.3 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt$614M
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$697M
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Margin of Safety0.0%
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book3.22x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
B
Free Cash Flow$491M
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income25.0%
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings$750M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Align Technology, Inc.
Align Technology, Inc. provides Invisalign clear aligners, Vivera retainers, and iTero intraoral scanners and services in the United States, Switzerland, and internationally. The company's Clear Aligner segment offers Invisalign comprehensive package to treat adults and teens malocclusion and features, and orthodontic needs of teenage or younger patients; and Invisalign First Phase I and Invisalign First Comprehensive Phase 2 package for younger patients between the ages of six and ten years with a mixture of primary/baby and permanent teeth. This segment also provides Invisalign express, Invisalign lite, and Invisalign moderate; Invisalign Go, Invisalign Go express, and Invisalign Go Plus; retention products, Invisalign training, adjusting tools used by dental professionals during treatment, ancillary Invisalign accessory products, and other oral health products; Invisalign Professional Whitening system; Invisalign Palatal Expander, a 3D printed orthodontic device; and 3D printing solutions. Its Imaging Systems and CAD/CAM Services segment offers iTero intraoral scanning system, a single hardware platform for restorative or orthodontic procedures; exocad, a computer-aided design and computer-aided manufacturing software; orthodontist software for digital records storage, orthodontic diagnosis, and fabrication of printed models and retainers; and restorative software for general practitioner dentists, prosthodontists, periodontists, and oral surgeons. This segment also offers Invisalign outcome simulator, a chair-side and cloud-based application for the iTero scanner; Invisalign progress assessment tool; Align Oral Health Suite, a digital interface for dental consultations; iTero TimeLapse technology for doctors or practitioners to compare a patient's historic 3D scans to the present-day scan; and subscription software, disposables, rents scanners, and pay per scan services. Align Technology, Inc. was incorporated in 1997 and is headquartered in Tempe, Arizona.
Align Technology, Inc. provides Invisalign clear aligners, Vivera retainers, and iTero intraoral scanners and services in the United States, Switzerland, and internationally. The company's Clear Aligner segment offers Invisalign comprehensive package to treat adults and teens malocclusion and features, and orthodontic needs of teenage or younger patients; and Invisalign First Phase I and Invisalign First Comprehensive Phase 2 package for younger patients between the ages of six and ten years with a mixture of primary/baby and permanent teeth. This segment also provides Invisalign express, Invisalign lite, and Invisalign moderate; Invisalign Go, Invisalign Go express, and Invisalign Go Plus; retention products, Invisalign training, adjusting tools used by dental professionals during treatment, ancillary Invisalign accessory products, and other oral health products; Invisalign Professional Whitening system; Invisalign Palatal Expander, a 3D printed orthodontic device; and 3D printing solutions. Its Imaging Systems and CAD/CAM Services segment offers iTero intraoral scanning system, a single hardware platform for restorative or orthodontic procedures; exocad, a computer-aided design and computer-aided manufacturing software; orthodontist software for digital records storage, orthodontic diagnosis, and fabrication of printed models and retainers; and restorative software for general practitioner dentists, prosthodontists, periodontists, and oral surgeons. This segment also offers Invisalign outcome simulator, a chair-side and cloud-based application for the iTero scanner; Invisalign progress assessment tool; Align Oral Health Suite, a digital interface for dental consultations; iTero TimeLapse technology for doctors or practitioners to compare a patient's historic 3D scans to the present-day scan; and subscription software, disposables, rents scanners, and pay per scan services. Align Technology, Inc. was incorporated in 1997 and is headquartered in Tempe, Arizona.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Mr. Market is currently offering Align Technology, Inc. at $182.08.
The business passes only 2 of 7 of Graham's defensive criteria — well below his required standard.
At $182.08, the stock trades at a 115% premium to its Graham Number of $84.78. Graham would consider this price speculative.
There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.
Trading at 30.2x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies..
Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.
Showing Key Metrics
Income Highlights
Metric
2025
2024
2023
2022
2021
Gross Profit %
67.2%▼
70.0%▼
70.1%▼
70.5%•
N/A
Operating Margin %
14.5%▼
16.8%▼
17.0%▼
17.5%•
N/A
Net Income %
10.2%▼
10.5%▼
11.5%▲
9.7%•
N/A
Diluted EPS
5.65▲
5.62▼
5.81▲
4.61•
N/A
Balance Sheet Highlights
Metric
2025
2024
2023
2022
2021
Total Assets
$6.2B
$6.2B
$6.1B
$5.9B
N/A
Total Debt
$114M▼
$119M▼
$127M▼
$127M•
N/A
Working Capital
$697M▲
$454M▲
$380M▼
$499M•
N/A
Years to Pay Debt
0.28
0.28
0.28
0.35
N/A
Cash Flow Highlights
Metric
2025
2024
2023
2022
2021
Free Cash Flow
$491M▼
$623M▲
$608M▲
$277M•
N/A
Owner Earnings
$750M
$682M
$765M
$779M
N/A
CapEx % of Net Income
25.0%
27.4%
39.9%
80.7%
N/A
Income Statement
2025
2024
2023
2022
2021
Tax Effect Of Unusual Items
-11,823
-19,758
-4,075
-4,535
Tax Rate For Calcs
0
0
0
0
Normalized EBITDA
862,303
880,934
812,371
791,294
Total Unusual Items
-39,556
-64,136
-13,316
-11,453
Total Unusual Items Excluding Goodwill
-39,556
-64,136
-13,316
-11,453
Net Income From Continuing Operation Net Minority Interest
410,351
421,362
445,053
361,573
Reconciled Depreciation
237,436
145,034
142,401
125,793
Reconciled Cost Of Revenue
1,323,951
1,199,853
1,155,397
1,100,860
EBITDA
822,747
816,798
799,055
779,841
EBIT
585,311
671,764
656,654
654,048
Net Interest Income
16,045
20,218
17,258
5,367
Interest Income
16,045
20,218
17,258
5,367
Normalized Income
438,084
465,740
454,294
368,491
Net Income From Continuing And Discontinued Operation
410,351
421,362
445,053
361,573
Total Expenses
3,449,653
3,327,248
3,205,606
3,080,587
Total Operating Income As Reported
545,755
607,628
643,338
642,595
Diluted Average Shares
72,588
74,993
76,568
78,420
Basic Average Shares
72,542
74,877
76,426
78,190
Diluted EPS
0
0
0
0
Basic EPS
0
0
0
0
Diluted NI Availto Com Stockholders
410,351
421,362
445,053
361,573
Net Income Common Stockholders
410,351
421,362
445,053
361,573
Net Income
410,351
421,362
445,053
361,573
Net Income Including Noncontrolling Interests
410,351
421,362
445,053
361,573
Net Income Continuous Operations
410,351
421,362
445,053
361,573
Tax Provision
174,936
187,597
196,151
237,484
Pretax Income
585,287
608,959
641,204
599,057
Other Income Expense
-16,069
-83,023
-32,708
-60,358
Other Non Operating Income Expenses
23,487
-18,887
-19,392
-48,905
Special Income Charges
-39,556
-64,136
-13,316
-11,453
Other Special Charges
4,178
30,968
Restructuring And Mergern Acquisition
35,378
33,168
13,316
11,453
Net Non Operating Interest Income Expense
16,045
20,218
17,258
5,367
Interest Income Non Operating
16,045
20,218
17,258
5,367
Operating Income
585,311
671,764
656,654
654,048
Operating Expense
2,125,702
2,127,395
2,050,209
1,979,727
Research And Development
369,911
364,202
346,830
305,258
Selling General And Administration
1,755,791
1,763,193
1,703,379
1,674,469
Gross Profit
2,711,013
2,799,159
2,706,863
2,633,775
Cost Of Revenue
1,323,951
1,199,853
1,155,397
1,100,860
Total Revenue
4,034,964
3,999,012
3,862,260
3,734,635
Operating Revenue
4,034,964
3,999,012
3,862,260
3,734,635
Balance Sheet
2025
2024
2023
2022
2021
Ordinary Shares Number
71,364
73,849
75,075
77,267
Share Issued
71,364
73,849
75,075
77,267
Total Debt
114,446
119,277
126,619
126,908
Tangible Book Value
3,463,381
3,305,867
3,128,841
3,098,087
Invested Capital
4,049,147
3,851,985
3,630,489
3,601,358
Working Capital
696,547
454,414
380,007
498,504
Net Tangible Assets
3,463,381
3,305,867
3,128,841
3,098,087
Capital Lease Obligations
114,446
119,277
126,619
126,908
Common Stock Equity
4,049,147
3,851,985
3,630,489
3,601,358
Total Capitalization
4,049,147
3,851,985
3,630,489
3,601,358
Total Equity Gross Minority Interest
4,049,147
3,851,985
3,630,489
3,601,358
Stockholders Equity
4,049,147
3,851,985
3,630,489
3,601,358
Gains Losses Not Affecting Retained Earnings
75,388
5,978
21,168
-10,284
Other Equity Adjustments
75,388
5,978
21,168
-10,284
Retained Earnings
2,464,157
2,483,766
2,447,174
2,566,688
Additional Paid In Capital
1,509,595
1,362,234
1,162,140
1,044,946
Capital Stock
7
7
7
8
Common Stock
7
7
7
8
Total Liabilities Net Minority Interest
2,184,546
2,362,615
2,453,388
2,346,589
Total Non Current Liabilities Net Minority Interest
264,531
324,588
386,777
420,702
Other Non Current Liabilities
113,824
139,908
173,065
195,975
Tradeand Other Payables Non Current
68,200
96,466
116,744
124,393
Long Term Debt And Capital Lease Obligation
82,507
88,214
96,968
100,334
Long Term Capital Lease Obligation
82,507
88,214
96,968
100,334
Current Liabilities
1,920,015
2,038,027
2,066,611
1,925,887
Current Deferred Liabilities
1,261,816
1,331,146
1,427,706
1,343,643
Current Deferred Revenue
1,261,816
1,331,146
1,427,706
1,343,643
Current Debt And Capital Lease Obligation
31,939
31,063
29,651
26,574
Current Capital Lease Obligation
31,939
31,063
29,651
26,574
Payables And Accrued Expenses
626,260
675,818
609,254
555,670
Current Accrued Expenses
460,761
518,317
458,026
353,477
Payables
165,499
157,501
151,228
202,193
Total Tax Payable
44,049
48,808
38,103
74,323
Income Tax Payable
44,049
48,808
38,103
74,323
Accounts Payable
121,450
108,693
113,125
127,870
Total Assets
6,233,693
6,214,600
6,083,877
5,947,947
Total Non Current Assets
3,617,131
3,722,159
3,637,259
3,523,556
Other Non Current Assets
278,048
234,159
128,682
55,826
Non Current Deferred Assets
1,513,542
1,557,372
1,590,045
1,571,746
Non Current Deferred Taxes Assets
1,513,542
1,557,372
1,590,045
1,571,746
Investments And Advances
0
8,022
41,978
125,320
Investmentin Financial Assets
0
8,022
41,978
125,320
Available For Sale Securities
8,022
41,978
125,320
Goodwill And Other Intangible Assets
585,766
546,118
501,648
503,271
Other Intangible Assets
93,933
103,488
82,118
95,720
Goodwill
491,833
442,630
419,530
407,551
Net PPE
1,239,775
1,384,510
1,408,862
1,350,735
Accumulated Depreciation
-767,324
-661,712
-550,762
-449,726
Gross PPE
2,007,099
2,046,222
1,959,624
1,800,461
Leases
67,402
62,172
62,216
64,238
Construction In Progress
127,944
133,684
245,722
285,202
Other Properties
956,795
985,203
821,804
702,656
Machinery Furniture Equipment
272,482
271,572
248,453
223,477
Buildings And Improvements
524,608
529,716
517,554
466,003
Land And Improvements
57,868
63,875
63,875
58,885
Current Assets
2,616,562
2,492,441
2,446,618
2,424,391
Other Current Assets
47,274
81,576
77,335
16,762
Assets Held For Sale Current
27,983
0
Prepaid Assets
62,478
82,978
52,487
69,124
Inventory
226,343
254,287
296,902
338,752
Finished Goods
53,368
56,250
60,151
69,436
Work In Process
65,679
73,660
91,259
96,558
Raw Materials
107,296
124,377
145,492
172,758
Receivables
1,157,576
1,029,713
1,047,152
1,000,169
Taxes Receivable
55,819
34,028
143,728
140,484
Accounts Receivable
1,101,757
995,685
903,424
859,685
Allowance For Doubtful Accounts Receivable
-34,213
-19,131
-14,893
-10,343
Gross Accounts Receivable
1,135,970
1,014,816
918,317
870,028
Cash Cash Equivalents And Short Term Investments
1,094,908
1,043,887
972,742
999,584
Other Short Term Investments
0
35,304
57,534
71,972
Cash And Cash Equivalents
1,094,908
1,043,887
937,438
942,050
Cash Equivalents
324,857
291,464
49,756
229,129
Cash Financial
770,051
752,423
887,682
712,921
Cash Flow
2025
2024
2023
2022
2021
Free Cash Flow
490,778
622,651
608,060
276,832
Repurchase Of Capital Stock
-465,939
-352,878
-592,360
-435,036
Issuance Of Capital Stock
21,749
25,281
26,595
26,149
Capital Expenditure
-102,445
-115,580
-177,716
-291,900
Income Tax Paid Supplemental Data
134,753
177,082
294,569
231,884
End Cash Position
1,096,186
1,044,963
938,519
942,355
Beginning Cash Position
1,044,963
938,519
942,355
1,100,139
Effect Of Exchange Rate Changes
35,025
-21,153
4,671
-11,514
Changes In Cash
16,198
127,597
-8,507
-146,270
Financing Cash Flow
-464,580
-355,722
-598,340
-501,686
Cash Flow From Continuing Financing Activities
-464,580
-355,722
-598,340
-501,686
Net Other Financing Charges
-20,390
-28,125
-32,575
-92,799
Net Common Stock Issuance
-444,190
-327,597
-565,765
-408,887
Common Stock Payments
-465,939
-352,878
-592,360
-435,036
Common Stock Issuance
21,749
25,281
26,595
26,149
Investing Cash Flow
-112,445
-254,912
-195,943
-213,316
Cash Flow From Continuing Investing Activities
-112,445
-254,912
-195,943
-213,316
Net Other Investing Changes
235
278
-2,211
-417
Net Investment Purchase And Sale
0
43,853
58,494
93,099
Sale Of Investment
0
43,853
61,404
121,101
Purchase Of Investment
0
0
-2,910
-28,002
Net Business Purchase And Sale
-10,000
-183,420
-76,999
-12,304
Purchase Of Business
-10,000
-183,420
-76,999
-12,304
Net PPE Purchase And Sale
-102,445
-115,580
-177,716
-291,900
Purchase Of PPE
-102,445
-115,580
-177,716
-291,900
Operating Cash Flow
593,223
738,231
785,776
568,732
Cash Flow From Continuing Operating Activities
593,223
738,231
785,776
568,732
Change In Working Capital
-356,015
-72,433
-7,892
-84,314
Change In Other Working Capital
-111,756
-80,109
86,714
241,886
Change In Payables And Accrued Expense
-118,589
68,583
30,852
-152,138
Change In Accrued Expense
-95,654
89,705
46,327
-121,942
Change In Payable
-22,935
-21,122
-15,475
-30,196
Change In Account Payable
5,330
-843
-7,703
-36,523
Change In Tax Payable
-28,265
-20,279
-7,772
6,327
Change In Income Tax Payable
-28,265
-20,279
-7,772
6,327
Change In Prepaid Assets
13,431
67,527
-51,013
-65,514
Change In Inventory
808
25,053
30,169
-130,097
Change In Receivables
-139,909
-153,487
-104,614
21,549
Changes In Account Receivables
-139,909
-153,487
-104,614
21,549
Other Non Cash Items
77,428
50,694
65,840
71,808
Stock Based Compensation
185,870
173,703
154,026
133,367
Provisionand Write Offof Assets
2,814
Asset Impairment Charge
5,068
-5,885
4,990
0
Deferred Tax
33,085
25,756
-18,642
-39,495
Deferred Income Tax
33,085
25,756
-18,642
-39,495
Depreciation Amortization Depletion
237,436
145,034
142,401
125,793
Depreciation And Amortization
237,436
145,034
142,401
125,793
Depreciation
108,729
Operating Gains Losses
-43,403
Gain Loss On Investment Securities
-43,403
Net Income From Continuing Operations
410,351
421,362
445,053
361,573
2/7
Graham Score
Speculative Investor
Fails most of Graham's safety criteria. Treat with caution.
Graham's Fair Value
$84.78
Margin of Safety
0%
Market Cap / Net Assets
3.2x
Net Assets: $4.0B
Warren's Owner Earnings
$750M
Latest fiscal year
Graham's 7 Criteria
Defensive Investor Checklist
2/7 — Speculative Investor
✅
Adequate Size
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
$4.0B
vs > $1.5B revenue
❌
Strong Financial Condition
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
1.36x
vs Current Ratio > 2.0x
✅
Earnings Stability
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
No loss years (4 yrs data)
vs No negative EPS years
❌
Dividend Record
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
No dividend
vs Uninterrupted dividends
❌
Earnings Growth
EPS grew from $4.61 to $5.65 over 3 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
+22.6% EPS growth
vs > 33% EPS growth
❌
Moderate P/E Ratio
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
30.7x
vs P/E ≤ 15.0x
❌
Moderate Price-to-Book
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
3.22x P/B (P/E×P/B: 98.7)
vs P/B ≤ 1.5x | P/E × P/B ≤ 22.5
Graham's 7 Criteria — Explained
What each criterion measures and why it matters.
✅ Adequate Size — $4.0Bvs > $1.5B revenue
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
"The minimum size of an enterprise should be not less than $100 million of annual sales."
❌ Strong Financial Condition — 1.36xvs Current Ratio > 2.0x
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
"For industrial companies, current assets should be at least twice current liabilities."
✅ Earnings Stability — No loss years (4 yrs data)vs No negative EPS years
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
"The company should have shown no deficit in the past ten years."
❌ Dividend Record — No dividendvs Uninterrupted dividends
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
"Some current dividend payments — for at least the past 20 years."
EPS grew from $4.61 to $5.65 over 3 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
"A minimum increase of at least one-third in per-share earnings over ten years."
❌ Moderate P/E Ratio — 30.7xvs P/E ≤ 15.0x
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
"The price-earnings ratio should be no more than 15 times average earnings."
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
"The price should not be more than 1½ times book value. P/E × P/B ≤ 22.5."
These metrics estimate what Align Technology, Inc. is worth based on fundamentals — independent of what the market prices it at.
Graham's Fair Value and NCAV are conservative floors.
EPV assumes zero growth. These are reference points, not price targets.
Net Current Asset Value
$6.03
Trading at 30.2x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies.
"Buy at two-thirds of net current assets." — Graham
Earnings Power Value
$90.81
Per share, no-growth floor. Compare to current price.
ROIC — Return on Invested Capital
10.7%
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Cash Flow Analysis
Metric
2025
2024
2023
2022
2021
Capital Expenditure % of Net Income
25.0%
27.4%
39.9%
80.7%
N/A
Repurchase of Capital Stock
-$466M
-$353M
-$592M
-$435M
N/A
Free Cash Flow
$491M▼
$623M▲
$608M▲
$277M•
N/A•
Warren's Owner Earnings
$750M
$682M
$765M
$779M
N/A
Peers & Industry
No auto-detected peers for Medical Instruments & Supplies. You can manually compare ALGN against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
6.82%
Moderate — some alignment with shareholders
Return on Equity (ROE)
10.1%
Adequate — returns are moderate
Return on Assets (ROA)
6.6%
Strong — management uses assets efficiently
Share Buybacks (Latest Year)
$466M
Management is returning capital to shareholders via buybacks
Debt Trend YoY
-4.1% YoY
Debt is declining — management is deleveraging
Leadership Team
Joseph Hogan
President, CEO & Director
Age 68
Pay: $2,637,116
0.643% of net income
John Morici
CFO & Executive VP of Global Finance
Age 58
Pay: $1,024,500
0.250% of net income
Shirley Stacy
Vice President of Corporate Communications & Investor Relations
Richardson Jaime Holte
Executive Vice President of Global Human Resources
Srini Kaza
Executive Vice President of Research & Development
Top Institutional Holders
Institution
% Owned
Shares
Vanguard Capital Management LLC
6.13%
4,389,119
Blackrock Inc.
5.99%
4,289,924
Capital World Investors
5.69%
4,072,296
Capital International Investors
5.32%
3,809,202
Vanguard Portfolio Management LLC
4.40%
3,150,783
FMR, LLC
3.77%
2,700,359
State Street Corporation
3.51%
2,516,254
Ninety One UK Ltd
3.11%
2,228,214
Risk Analysis
Beta (Market Risk)
1.67
High volatility — moves more than the market
Short Interest
7.4% of float
Moderate short interest
Debt-to-Equity
0.03x
Conservative balance sheet — low financial risk
Current Ratio
1.39x
Adequate liquidity
52-Week Price Range
Low: $122.00Current: $182.08High: $208.31
Currently at 70% of 52-week range
Align Technology, Inc. (ALGN) fundamental analysis — Overall grade B based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: $84.78. Margin of safety: 0%. Gross profit margin: 67.2%. Operating margin: 14.5%. Net margin: 10.2%. Market cap: $13.0B. Sector: Healthcare. Industry: Medical Instruments & Supplies. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
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