Today we're going to take a closer look at large-cap Health Care company DexCom, whose shares are currently trading at $126.76. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
DexCom's P/B and P/E Ratios Are Higher Than Average:
DexCom, Inc., a medical device company, focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems in the United States and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 24.45 and an average price to book (P/B) ratio of 4.16. In contrast, DexCom has a trailing 12 month P/E ratio of 178.5 and a P/B ratio of 22.0.
DexCom's PEG ratio is 3.94, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company Has a Positive Net Current Asset Value:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $1,476 | $1,927 | $2,448 | $2,910 |
| Gross Margins | 63.1% | 66.4% | 68.6% | 64.7% |
| Operating Margins | 9.6% | 15.5% | 10.9% | 13.4% |
| Net Margins | 6.85% | 25.62% | 6.32% | 11.73% |
| Net Income (MM) | $101 | $494 | $155 | $341 |
| Net Interest Expense (MM) | -34 | -69 | -102 | -1 |
| Net Interest Expense (MM) | -$34 | -$69 | -$102 | -$1 |
| Depreciation & Amort. (MM) | -$49 | -$67 | -$102 | -$8 |
| Earnings Per Share | $0.28 | $1.26 | $0.53 | $0.71 |
| EPS Growth | n/a | 350.0% | -57.94% | 33.96% |
| Diluted Shares (MM) | 369 | 390 | 429 | 388 |
| Free Cash Flow (MM) | $134 | $277 | $53 | $305 |
| Capital Expenditures (MM) | -$180 | -$199 | -$389 | -$365 |
| Net Current Assets (MM) | $457 | $961 | $1,072 | $409 |
| Current Ratio | 5.47 | 5.58 | 5.11 | 1.99 |
| Long Term Debt (MM) | $1,060 | $1,667 | $1,703 | $1,198 |
| Net Debt / EBITDA | 3.36 | 2.4 | 1.77 | 3.38 |
DexCom benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and wider gross margins than its peer group. The company's financial statements show average operating margins with a positive growth rate and generally positive cash flows. Furthermore, DexCom has a decent current ratio and significant leverage.
