Is DexCom (DXCM) an Overvalued Company?

DexCom may be overvalued with mixed growth prospects, but the 19 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $110.0 to $150.0 per share, for an average of $132.22. At today's price of $117.19, DexCom is trading -11.37% away from its average target price, suggesting there is an analyst consensus of some upside potential.

DexCom, Inc. is a company that develops, manufactures, and distributes continuous glucose monitoring (CGM) systems for diabetes management. The large-cap Basic Materials company is based in San Diego, CA.

DexCom has a trailing twelve month P/E ratio of 142.91, compared to an average of 10.03 for the Basic Materials sector. Based on its EPS guidance of 1.44, the company has a forward P/E ratio of 81.38.

DexCom is likely overvalued compared to its book value, since its P/B ratio of 24.66 is higher than the sector average of 2.08. The company's shares are currently trading 704.32% above their Graham number, implying that they are overvalued in terms of earnings and book value.

If analysts are giving the the company a decent rating despite its hefty price point, it could be related to its strong cash flows. They might also believe that DexCom's positive margin growth trend will continue.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $1,397 $1,822 $2,334 $2,889
Revenue Growth n/a 30.48% 28.05% 23.8%
Gross Margins 66.69% 70.24% 72.01% 65.18%
Gross Margins Growth n/a 5.32% 2.52% -9.48%
Operating Margins 10.19% 16.43% 11.39% 13.54%
Operating Margins Growth n/a 61.24% -30.68% 18.88%
Earnings Per Share $1.1 $5.72 $2.24 $0.88
EPS Growth n/a 420.0% -60.84% -60.71%
Diluted Shares (MM) 92 96 97 386
Free Cash Flow (MM) $134 $277 $53 $305
FCF Growth n/a 105.65% -80.73% 471.67%
Capital Expenditures (MM) $180 $199 $389 $365
Net Debt / EBITDA 3.79 2.73 2.4 5.02
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.