Align Technology (NASDAQ:ALGN) shareholders have had a lot to smile about. So far in 2018, the company has posted exceptional results in each of its two quarterly reports. Investor enthusiasm has driven the stock up nearly 50% so far this year -- even in the wake of the recent market rout -- while the S&P 500 (SNPINDEX:^GSPC) has gained less than 4%.

However, the market has become less forgiving lately, and investors will be watching closely for any signs that Align's business momentum is slowing when the company reports its third-quarter financial results after the market close on Wednesday, Oct. 24. Let's take a look at its recent performance and see what to expect from the company's earnings release.

A woman applying see-through aligners to her teeth.

Image source: Getty Images.

Reason to smile

Align has been on a winning streak and the second quarter was no different. The company reported revenue of $490.3 million, which grew 37.5% year over year, while diluted earnings per share soared 53%, to $1.30. Those numbers were remarkable enough, but Align also posted sequential gains, with revenue up 12% compared to the first quarter and profits that grew by nearly 11%.

That dramatic growth was driven by increasing case shipments of the company's Invisalign clear aligners, which jumped to 303,000, up 30.5% year over year. The product has become a favorite of self-conscious teens, as shipments of Invisalign cases for this demographic climbed an impressive 42% compared to the prior-year quarter.

The company also revealed that its customer base exceeded 50,000 for the first time. Align's sales of scanners and services continued to gain traction, with revenue of $57 million, up 61% year over year. Because of its rapid growth, the segment now accounts for more than 11% of the company's total sales.

Align continues to see massive opportunities in international markets. Case shipments in Europe, the Middle East, and Africa (EMEA) climbed 38% year over year, while Asia Pacific case volume jumped 59%. Keep an eye on international shipments, as the ongoing trade dispute may put a damper on growth.

What the future could hold

Align Technology is forecasting revenue for the third quarter to be in a range of $493 million to $503 million, which would represent year-over-year growth of between 28% and 31%. The company also is guiding for Invisalign case shipments between 302,000 and 307,000, an increase of 28% to 30% compared to the prior-year quarter. Align is expecting diluted earnings per share in a range of $1.13 to $1.18, an increase of 14% at the midpoint of guidance.

While we won't be beholden to Wall Street's short-term thinking, it can help provide a bit of perspective. Analysts' consensus estimates are betting on revenue of $502.85 million and earnings per share of $1.19, both right near the top end of Align's guidance.

It's important to remember that if the last several quarters has taught us anything, it's that Align's management likes to be conservative with its forecast, which increases the likelihood that it will continue to exceed its own forecast and that of analysts, as well.

Align Technologies Julia and Dr Hagar looking braces on a computer screen.

Image source: Align Technologies.

A parting thought

While Align Technologies continues to have a long runway ahead, its stock price won't always go up. The stock closed at record highs near the end of September, only to plunge as much as 20% during the recent market meltdown. Considering that the company has a trailing-12-month price-to-earnings ratio (P/E) over 90 and an only slightly better forward valuation of 66, any sign of slowing growth could be met with a commensurate correction in the stock price.

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.