Better Buy for 2022: SmileDirectClub vs. Align Technology

: SDC | SmileDirectClub Inc. News, Ratings, and Charts

SDC – SmileDirectClub (SDC) and Align Technology (ALGN) are two companies that operate in the dental services segment. SDC is a small-cap player and has burnt massive investor wealth while Align Technology has outpaced the broader markets in the last 10 years. Let’s see which between the two should be part of your portfolio today.

SmileDirectClub (SDC) and Align Technology (ALGN) are both companies that are part of the dental services vertical.  This market is forecast to touch almost $700 billion by 2030, indicating an increase of 6.4% between 2021 and 2030.

North America is the leading dental services market due to a high geriatric population as well as rising demand for cosmetic dentistry in the region. 

Today I’ll analyze and compare SDC and ALGN to determine which stock is currently a better buy for 2022.

SmileDirectClub

SmileDirectClub is a small-cap stock valued at a market cap of $857 million. It’s down 88% from all-time highs and has burnt massive investor wealth since going public in September 2019. The company focuses on providing low-cost services to consumers and this strategy might backfire in an inflationary environment.

Rising costs primarily hurt families with a lower disposable income which is the target market of SDC. Right now, inflation has risen to its highest levels in 40 years and has already impacted order volumes for SmileDirectClub.

SDC recently announced it will suspend operations in international markets in Mexico, Spain, Germany, Austria, Netherlands, Singapore, New Zealand, and Hong Kong and will also halt expansion plans into additional markets until the impact of COVID-19 is eased. These exits will enable the company to allocate capital to regions with the potential for near-term profitability.

It will also reduce its workforce and these initiatives will help SDC to lower costs by $120 million this year.

While sales were down 12% in 2020 at $657 million, it might fall by another 2.6% to $639 million in 2021, before rising by 4.4% to $667 million in 2022.

Align Technology

A much larger player compared to SDC, Align Technology is valued at a market cap of almost $40 billion. It has returned 414% in the last five years and 1,810% since February 2012. Despite the staggering gains, the stock is also down 31% from all-time highs.

Align Tech reported sales of $2.4 billion in 2019 and ended 2021 with a top-line of $3.95 billion. So, its growth rate in the last two years is around 27%. Unlike SDC, Align is also profitable and its operating margin stood at a healthy 24.7% in 2021. 

Further, the clear aligner market is expected to grow at an annual rate of 28% through 2030, providing Align with enough opportunity to expand its revenue going forward, given it accounts for 80% of this market.

Analysts expect Align to increase sales by 20.6% to $4.77 billion in 2022 and by 22% to $5.81 billion in 2023. Comparatively, its adjusted earnings are forecast to expand from $11.22 in 2021 to $15.64 in 2023.

So, Align stock is valued at a forward price to 2023 sales multiple of 6.9x and a price to earnings multiple of 33x which might look expensive.

The verdict

It’s easy to pick a winner between SmileDirectClub and Align Technology. While SDC is struggling with inconsistent revenue growth and negative margins, ALGN is a company that is poised to experience substantial growth, and generate solid earnings all while dominating an expanding market.

Align stock is also trading at a discount of 30% to average analyst estimates and offers an enviable risk-reward profile to investors.


SDC shares were trading at $2.27 per share on Tuesday morning, up $0.06 (+2.71%). Year-to-date, SDC has declined -3.40%, versus a -6.46% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SDCGet RatingGet RatingGet Rating
ALGNGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Recession or Not Recession…That Is the Question

Every investor appreciates that recessions and bear markets go hand in hand. But the definition of a recession often seems more difficult to pin down. So are we in a recession? And if not, then does that mean that disaster has been averted or that the pain train is still rolling towards investors? This is an important debate because it helps us appreciate what lies ahead for the stock market (SPY). We will tackle this vital topic in this week's commentary. Read on below...

:  |  News, Ratings, and Charts

3 Cybersecurity Stocks to Buy on the Pullback

Tech stocks are rallying. Within the sector, cybersecurity stocks offer the best combination of growth and value especially as the sector's importance grows everyday. Read on to find out why investors should consider buying top cybersecurity stocks like Fortinet (FTNT), Qualys (QLYS), and OneSpan (OSPN).

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

:  |  News, Ratings, and Charts

Is Costco Stock Still a Buy Amid Retail Troubles?

Retail companies have faced significant headwinds this year due to sky-high inflation and supply chain disruptions. However, Costco Wholesale's (COST) strong revenue performance and consistent margins have helped the stock to remain resilient amid retail troubles. So is this stock worth adding to your portfolio now? Let’s find out…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

Read More Stories

More SmileDirectClub Inc. (SDC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SDC News