DexCom (DXCM) Outpaces Stock Market Gains: What You Should Know

·3-min read

In the latest trading session, DexCom (DXCM) closed at $116.18, marking a +1.56% move from the previous day. This change outpaced the S&P 500's 1.44% gain on the day. At the same time, the Dow added 1.26%, and the tech-heavy Nasdaq gained 5.21%.

Prior to today's trading, shares of the medical device company had lost 5.64% over the past month. This has lagged the Medical sector's gain of 2.17% and the S&P 500's gain of 2.28% in that time.

DexCom will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.15, up 87.5% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $719.86 million, up 14.48% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.07 per share and revenue of $3.46 billion. These totals would mark changes of +22.99% and +18.82%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for DexCom. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.95% higher within the past month. DexCom currently has a Zacks Rank of #3 (Hold).

In terms of valuation, DexCom is currently trading at a Forward P/E ratio of 107.28. Its industry sports an average Forward P/E of 26.1, so we one might conclude that DexCom is trading at a premium comparatively.

Also, we should mention that DXCM has a PEG ratio of 2.75. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Medical - Instruments was holding an average PEG ratio of 2.13 at yesterday's closing price.

The Medical - Instruments industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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