DXCM Lost 16% In A Month. Do You Buy Or Wait?
DexCom (DXCM) stock is down 15.7% in 21 trading days. Already own the stock or planning to buy? You might want to re-consider based on the valuation as the stock still looks expensive. Consider the following data:
- Size: A $29 Bil company with $4.3 Bil in revenue currently trading at $75.08.
- Fundamentals: Last 12 month revenue growth of 9.3% and operating margin of 16.0%.
- Liquidity: Has Debt to Equity ratio of 0.1 and Cash to Assets ratio of 0.4
- Valuation: Currently trading at P/E multiple of 51.5 and P/EBIT multiple of 36.7
- Has returned (median) 48.6% within a year following sharp dips since 2010. See DXCM Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for DXCM, see Buy or Sell DXCM Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and DXCM drops another 20-30% to $52.56 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into DexCom (DXCM) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: DXCM provides continuous glucose monitoring systems, including the next-generation G7 CGM, designed, developed, and commercialized for use in the U.S. and internationally.
2022 Inflation Shock
- DXCM stock fell 58.2% from a high of $162.81 on 17 November 2021 to $67.99 on 16 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $140.45 on 9 April 2024 , and currently trades at $75.08
| DXCM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -58.2% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- DXCM stock fell 36.8% from a high of $75.63 on 20 February 2020 to $47.79 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 16 April 2020
| DXCM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -36.8% | -33.9% |
| Time to Full Recovery | 29 days | 148 days |
2018 Correction
- DXCM stock fell 48.0% from a high of $21.37 on 17 January 2017 to $11.12 on 26 October 2017 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 May 2018
| DXCM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -48.0% | -19.8% |
| Time to Full Recovery | 193 days | 120 days |
2008 Global Financial Crisis
- DXCM stock fell 87.0% from a high of $2.67 on 9 October 2007 to $0.35 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 23 March 2010
| DXCM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -87.0% | -56.8% |
| Time to Full Recovery | 488 days | 1480 days |
Worried that DXCM could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.