3 Reasons We're Fans of DexCom (DXCM)

What a brutal six months it’s been for DexCom. The stock has dropped 32.6% and now trades at $58.63, rattling many shareholders. This may have investors wondering how to approach the situation.

Given the weaker price action, is now an opportune time to buy DXCM? Find out in our full research report, it’s free for active Edge members.

Why Is DexCom a Good Business?

Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.

1. Core Business Firing on All Cylinders

In addition to reported revenue, organic revenue is a useful data point for analyzing Patient Monitoring companies. This metric gives visibility into DexCom’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, DexCom’s organic revenue averaged 16.8% year-on-year growth. This performance was impressive and shows it can expand quickly without relying on expensive (and risky) acquisitions.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

DexCom’s EPS grew at an astounding 17.5% compounded annual growth rate over the last five years. This performance was better than most healthcare businesses.

3. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, DexCom’s margin expanded by 17.5 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. DexCom’s free cash flow margin for the trailing 12 months was 23.5%.

Final Judgment

These are just a few reasons DexCom is a high-quality business worth owning. After the recent drawdown, the stock trades at 24.4× forward P/E (or $58.63 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More Than DexCom

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.