We assign a fundamental rating of 7 out of 10 to DXCM. DXCM was compared to 185 industry peers in the Health Care Equipment & Supplies industry. Both the health and profitability get an excellent rating, making DXCM a very profitable company, without any liquidiy or solvency issues. DXCM is growing strongly while it is still valued neutral. This is a good combination! With these ratings, DXCM could be worth investigating further for growth and quality investing!.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year DXCM was profitable.
DXCM had a positive operating cash flow in the past year.
In the past 5 years DXCM has always been profitable.
Each year in the past 5 years DXCM had a positive operating cash flow.

1.2 Ratios

The Return On Assets of DXCM (9.61%) is better than 92.97% of its industry peers.
DXCM has a Return On Equity of 26.44%. This is amongst the best in the industry. DXCM outperforms 97.30% of its industry peers.
With an excellent Return On Invested Capital value of 15.72%, DXCM belongs to the best of the industry, outperforming 95.68% of the companies in the same industry.
DXCM had an Average Return On Invested Capital over the past 3 years of 11.25%. This is above the industry average of 8.81%.
The 3 year average ROIC (11.25%) for DXCM is below the current ROIC(15.72%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	9.61%
ROE	26.44%
ROIC	15.72%

ROA(3y)7.95%

ROA(5y)8.21%

ROE(3y)23.2%

ROE(5y)22.06%

ROIC(3y)11.25%

ROIC(5y)9.23%

1.3 Margins

DXCM has a better Profit Margin (15.96%) than 92.97% of its industry peers.
DXCM's Profit Margin has improved in the last couple of years.
DXCM has a better Operating Margin (18.41%) than 90.27% of its industry peers.
In the last couple of years the Operating Margin of DXCM has grown nicely.
DXCM has a better Gross Margin (60.20%) than 61.62% of its industry peers.
In the last couple of years the Gross Margin of DXCM has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	18.41%
PM (TTM)	15.96%
GM	60.2%

OM growth 3Y10.52%

OM growth 5Y8.87%

PM growth 3Y17.27%

PM growth 5Y15.84%

GM growth 3Y-3.98%

GM growth 5Y-0.72%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), DXCM is creating some value.
The number of shares outstanding for DXCM has been increased compared to 1 year ago.
The number of shares outstanding for DXCM has been increased compared to 5 years ago.
DXCM has a better debt/assets ratio than last year.

2.2 Solvency

DXCM has an Altman-Z score of 5.25. This indicates that DXCM is financially healthy and has little risk of bankruptcy at the moment.
DXCM has a better Altman-Z score (5.25) than 77.84% of its industry peers.
DXCM has a debt to FCF ratio of 2.36. This is a good value and a sign of high solvency as DXCM would need 2.36 years to pay back of all of its debts.
DXCM's Debt to FCF ratio of 2.36 is amongst the best of the industry. DXCM outperforms 85.41% of its industry peers.
DXCM has a Debt/Equity ratio of 0.47. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.47, DXCM is in line with its industry, outperforming 43.78% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.47
Debt/FCF	2.36
Altman-Z	5.25

ROIC/WACC1.63

WACC9.67%

2.3 Liquidity

A Current Ratio of 1.56 indicates that DXCM should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.56, DXCM is doing worse than 71.35% of the companies in the same industry.
A Quick Ratio of 1.38 indicates that DXCM should not have too much problems paying its short term obligations.
DXCM has a worse Quick ratio (1.38) than 60.00% 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.

		Industry Rank	Sector Rank
Current Ratio	1.56
Quick Ratio	1.38

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 9.41% over the past year.
The Earnings Per Share has been growing by 29.25% on average over the past years. This is a very strong growth
DXCM shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.21%.
DXCM shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 22.27% yearly.

EPS 1Y (TTM)9.41%

EPS 3Y35.38%

EPS 5Y29.25%

EPS Q2Q%35.56%

Revenue 1Y (TTM)14.21%

Revenue growth 3Y18.1%

Revenue growth 5Y22.27%

Sales Q2Q%21.64%

3.2 Future

Based on estimates for the next years, DXCM will show a very strong growth in Earnings Per Share. The EPS will grow by 22.05% on average per year.
The Revenue is expected to grow by 13.28% on average over the next years. This is quite good.

EPS Next Y27.38%

EPS Next 2Y23.51%

EPS Next 3Y22.59%

EPS Next 5Y22.05%

Revenue Next Year15.45%

Revenue Next 2Y14.08%

Revenue Next 3Y13.66%

Revenue Next 5Y13.28%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

DXCM is valuated quite expensively with a Price/Earnings ratio of 39.27.
Based on the Price/Earnings ratio, DXCM is valued a bit cheaper than 70.27% of the companies in the same industry.
DXCM is valuated rather expensively when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
DXCM is valuated quite expensively with a Price/Forward Earnings ratio of 29.02.
Based on the Price/Forward Earnings ratio, DXCM is valued a bit cheaper than 72.43% of the companies in the same industry.
DXCM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.57, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	39.27
Fwd PE	29.02

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, DXCM is valued a bit cheaper than 72.97% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DXCM indicates a rather cheap valuation: DXCM is cheaper than 82.16% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	26.83
EV/EBITDA	24.34

4.3 Compensation for Growth

DXCM's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
DXCM has an outstanding profitability rating, which may justify a higher PE ratio.
DXCM's earnings are expected to grow with 22.59% in the coming years. This may justify a more expensive valuation.