DEXCOM INC (NASDAQ:DXCM)—Positioned as a High-Growth Stock, Ready for a Potential Breakout.

Groth investors are looking for stocks showing high revenue and EPS growth. We will have a look here to see if DEXCOM INC (NASDAQ:DXCM) is suited for growth investing, while it is forming a base and may be ready to breakout. Investors should of course do their own research, but we spotted DEXCOM INC showing up in our growth with base formation screen, so it may be worth spending some more time on it.

Analyzing Growth Metrics

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:DXCM scores a 8 out of 10:

• The Earnings Per Share has grown by an nice 9.27% over the past year.
• DXCM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 29.25% yearly.
• The Revenue has grown by 11.34% in the past year. This is quite good.
• Measured over the past years, DXCM shows a very strong growth in Revenue. The Revenue has been growing by 22.27% on average per year.
• Based on estimates for the next years, DXCM will show a very strong growth in Earnings Per Share. The EPS will grow by 21.71% on average per year.
• DXCM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.01% yearly.

How We Gauge Health for NASDAQ:DXCM

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:DXCM was assigned a score of 6 for health:

• An Altman-Z score of 6.28 indicates that DXCM is not in any danger for bankruptcy at the moment.
• With an excellent Altman-Z score value of 6.28, DXCM belongs to the best of the industry, outperforming 84.41% of the companies in the same industry.
• DXCM has a debt to FCF ratio of 3.96. This is a good value and a sign of high solvency as DXCM would need 3.96 years to pay back of all of its debts.
• DXCM has a Debt to FCF ratio of 3.96. This is amongst the best in the industry. DXCM outperforms 84.41% of its industry peers.
• DXCM does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Understanding NASDAQ:DXCM's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:DXCM was assigned a score of 9 for profitability:

• Looking at the Return On Assets, with a value of 8.89%, DXCM belongs to the top of the industry, outperforming 90.86% of the companies in the same industry.
• DXCM's Return On Equity of 27.40% is amongst the best of the industry. DXCM outperforms 97.31% of its industry peers.
• DXCM has a better Return On Invested Capital (14.49%) than 95.70% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for DXCM is above the industry average of 7.84%.
• The 3 year average ROIC (11.25%) for DXCM is below the current ROIC(14.49%), indicating increased profibility in the last year.
• The Profit Margin of DXCM (14.29%) is better than 91.40% of its industry peers.
• In the last couple of years the Profit Margin of DXCM has grown nicely.
• With an excellent Operating Margin value of 16.20%, DXCM belongs to the best of the industry, outperforming 87.63% of the companies in the same industry.
• In the last couple of years the Operating Margin of DXCM has grown nicely.
• DXCM's Gross Margin of 61.78% is fine compared to the rest of the industry. DXCM outperforms 62.90% of its industry peers.

Looking at the Setup

In addition to the Technical Rating, ChartMill provides a Setup Rating for each stock. This rating, ranging from 0 to 10, assesses the extent of consolidation in the stock based on multiple short-term technical indicators. Currently, NASDAQ:DXCM has a 8 as its setup rating:

DXCM has only a medium technical rating, but it does show a decent setup pattern. We see reduced volatility while prices have been consolidating in the most recent period. A pullback is taking place, which may present a nice opportunity for an entry. There is a support zone below the current price at 86.04, a Stop Loss order could be placed below this zone. Another positive sign is the recent Pocket Pivot signal.

More Strong Growth stocks can be found in our Strong Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of DXCM

Check the latest full technical report of DXCM for a complete technical analysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.