What happened

After Align Technology (NASDAQ:ALGN) reported case shipments had notched another quarterly increase, the company's shares climbed 11.4% in July, according to S&P Global Market Intelligence

So what

Growing global demand has turned Align Technology's shares into one of healthcare's best-performing stocks over the past three years, and based on the company's latest quarterly results, momentum remains a tailwind.

Five smiling men and women with their heads together in a circle.


The company reported on July 28 that North American case shipments grew 27.6% from one year ago last quarter. International case shipments grew even faster, increasing 37.4% year over year. 

Revenue in the second quarter totaled $356.5 million, up 32.3% from Q2 2016 and 14.9% from the first quarter, while earnings per share (EPS) increased 37.1% year over year to $0.85. 

Now what

Align Technology's shares have gained a lot of ground in the past few years, but I believe the market opportunity is big enough to justify a higher share price.

ALGN Total Return Price (Forward Adjusted) Chart

ALGN Total Return Price (Forward Adjusted) data by YCharts.

Align Technology's been steadily chipping away at the multibillion-dollar market for dental braces, and its second-quarter performance shows the company's doing better than ever at translating growth into bottom-line profit. During the quarter, revenue, volume, margins, and EPS all outpaced management's forecast.

The company didn't offer up full-year guidance in its quarterly report, but it did provide an outlook for the third quarter. It expects case shipments will grow between 30% and 32% in Q3 from one year ago, and that net revenue will increase 27% to 29% year over year to between $355 million and $360 million. It expects EPS to be $0.78 to $0.81 in the quarter.

Overall, Align Technology research investments are allowing Invisalign use in more complex cases, and global expansion is opening up new markets. As the company's addressable market increases, I think sales and profit will continue climbing, making the stock worth buying on a pullback.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.