Shares of DexCom (DXCM) have been strong performers lately, with the stock up 17.1% over the past month. The stock hit a new 52-week high of $84.7 in the previous session. DexCom has gained 25.7% since the start of the year compared to the 0.1% gain for the Zacks Medical sector and the -11.7% return for the Zacks Medical - Instruments industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on July 30, 2026, DexCom reported EPS of $0.7 versus consensus estimate of $0.61 while it beat the consensus revenue estimate by 1.01%.
For the current fiscal year, DexCom is expected to post earnings of $2.6 per share on $5.22 in revenues. This represents a 24.4% change in EPS on a 11.96% change in revenues. For the next fiscal year, the company is expected to earn $3.06 per share on $5.84 in revenues. This represents a year-over-year change of 17.72% and 11.85%, respectively.
Valuation Metrics
While DexCom has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
DexCom has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 32.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 25.2X. On a trailing cash flow basis, the stock currently trades at 30.1X versus its peer group's average of 14.7X. Additionally, the stock has a PEG ratio of 1.36. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, DexCom currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if DexCom meets the list of requirements. Thus, it seems as though DexCom shares could still be poised for more gains ahead.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>DexCom, Inc. (DXCM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
