Is NASDAQ:DXCM on the Verge of a Major Breakout as a Strong Growth Stock?

Growth investors are on the lookout for stocks displaying robust revenue and EPS growth. In this analysis, we'll assess whether DEXCOM INC (NASDAQ:DXCM) aligns with growth investing criteria, especially as it consolidates and signals a possible breakout. As always, investors should conduct their own research, but DEXCOM INC has surfaced on our radar for growth with base formation, warranting further examination.

Unpacking NASDAQ:DXCM's Growth Rating

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NASDAQ:DXCM boasts a 9 out of 10:

• DXCM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 92.86%, which is quite impressive.
• The Earnings Per Share has been growing by 23.89% on average over the past years. This is a very strong growth
• Looking at the last year, DXCM shows a very strong growth in Revenue. The Revenue has grown by 21.85%.
• Measured over the past years, DXCM shows a very strong growth in Revenue. The Revenue has been growing by 32.28% on average per year.
• The Earnings Per Share is expected to grow by 35.04% on average over the next years. This is a very strong growth
• Based on estimates for the next years, DXCM will show a quite strong growth in Revenue. The Revenue will grow by 19.72% on average per year.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

Health Assessment of NASDAQ:DXCM

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:DXCM has earned a 6 out of 10:

• DXCM has an Altman-Z score of 7.80. This indicates that DXCM is financially healthy and has little risk of bankruptcy at the moment.
• DXCM has a Altman-Z score of 7.80. This is amongst the best in the industry. DXCM outperforms 88.61% of its industry peers.
• DXCM has a better Debt to FCF ratio (5.23) than 84.16% of its industry peers.
• A Current Ratio of 2.80 indicates that DXCM has no problem at all paying its short term obligations.
• DXCM has a Quick Ratio of 2.50. This indicates that DXCM is financially healthy and has no problem in meeting its short term obligations.

Assessing Profitability for NASDAQ:DXCM

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:DXCM scores a 8 out of 10:

• DXCM has a Return On Assets of 5.72%. This is amongst the best in the industry. DXCM outperforms 86.14% of its industry peers.
• DXCM has a Return On Equity of 16.62%. This is amongst the best in the industry. DXCM outperforms 93.07% of its industry peers.
• The Return On Invested Capital of DXCM (9.08%) is better than 91.09% of its industry peers.
• The last Return On Invested Capital (9.08%) for DXCM is above the 3 year average (7.78%), which is a sign of increasing profitability.
• DXCM's Profit Margin of 11.08% is amongst the best of the industry. DXCM outperforms 89.11% of its industry peers.
• DXCM's Profit Margin has improved in the last couple of years.
• DXCM has a better Operating Margin (15.28%) than 88.12% of its industry peers.
• DXCM's Operating Margin has improved in the last couple of years.
• With a decent Gross Margin value of 64.28%, DXCM is doing good in the industry, outperforming 67.82% of the companies in the same industry.

Looking at the Setup

Besides the Technical Rating, ChartMill assigns a Setup Rating to every stock to determine the degree of consolidation. This rating, ranging from 0 to 10, is updated daily and evaluates various short-term technical indicators. NASDAQ:DXCM currently holds a 7 as its setup rating, suggesting a particular level of consolidation in the stock.

Besides having an excellent technical rating, DXCM also presents 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 resistance zone just above the current price starting at 117.91. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 117.89, a Stop Loss order could be placed below this zone.

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

Our latest full fundamental report of DXCM contains the most current fundamental analsysis.

Our latest full technical report of DXCM contains the most current technical analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.