Shares of Align Technology (ALGN -0.75%), the world's leading manufacturer of clear tooth aligners, jumped on Thursday, Feb. 2, after the company reported earnings results from the fourth quarter of 2022. Investors responding to better-than-expected results drove the stock 27% higher in a single trading session.

Align Technology's shareholders have been all smiles lately. The stock is up more than 70% in 2023.

Of course, past performance doesn't guarantee future results. Let's look at why this stock is soaring to see whether it can keep climbing for investors who buy in at recent prices.

Why Align Technology stock jumped higher

The average Wall Street analyst who follows Align Technology was expecting the company to earn $1.56 per share during the fourth quarter of 2022. Instead, the company earned $1.73 per share and exceeded revenue expectations.

Align generally can't record sales of its Invisalign clear aligners until a potential customer gets their teeth scanned at a dentist's office. Pandemic-related lockdowns that kept patients from reaching dental practices made the past few years more than a little challenging.

ALGN Revenue (Quarterly) Chart

ALGN Revenue (Quarterly) data by YCharts.

Perhaps the biggest factor pushing the stock higher was Align's ability to report quarterly revenue that exceeded the previous quarter for the first time in over a year.

Weakness in China led the company to predict fewer case shipments in the first quarter of 2023. Management thinks higher average selling prices on the aligners themselves should keep total revenue from falling in the near term.

Reasons to buy Align Technology stock now

Align Technology wants to see stabilization in the enormous Chinese market before it makes any predictions regarding the abrupt end of zero-COVID policies that began last December. The company isn't predicting it yet, but I expect pent-up demand in China to push total Invisalign case shipments significantly higher in the second half of 2023.

Align Technology isn't issuing a full-year revenue prediction yet, but the company still signaled confidence. Its board of directors authorized a new $1 billion share buyback program to follow an equally large buyback program expected to wrap up in the first half of 2023.

According to Align, around 21 million people annually, mostly teenagers, begin a form of orthodontic treatment. The company shipped enough Invisalign cases to estimate its share of the market at around 10%. This lack of penetration suggests there's still room for this company to grow.

Align Technology partners with orthodontists who, in turn, sell Invisalign clear aligners to patients they meet with in person. Direct-to-consumer competitors, like SmileDirectClub, seemed like serious threats in the past, but folks clearly prefer involving a professional in the process. Align Technology had a 75% share of the market for clear aligners last year, according to Grand View Research.

A buy now?

Align Technology gave its existing shareholders plenty to smile about in its latest earnings call, but it probably isn't the best stock you could buy right now. After climbing more than 70% year to date, it's trading at 78.1 times 2022 earnings or 35.5 times 2021 earnings. Any way you look at it, it's just too much.

Over the long run, I expect Align Technology's bottom line to climb by an annual percentage in the high single digits. That's nothing to complain about, but it isn't nearly fast enough to justify buying the stock at its nosebleed-inducing valuation. It's probably best to watch this one from a safe distance.