A Board Member Invested $1.1 Million in DexCom

Other medical instruments companies include Medtronic, Inc. (NYSE:MDT), Hill-Rom Holdings, Inc. (NYSE:HRC), West Pharmaceutical Services Inc. (NYSE:WST), and Haemonetics Corporation (NYSE:HAE). All of these peers are profitable on a trailing basis, though there is a wide range of earnings multiples: MDT, the largest of the four by market capitalization, actually has the lowest trailing P/E at 14 while West and Haemonetics trade at more than 25 times their trailing earnings. Haemonetics has recorded high revenue growth rates though its earnings have been down, and the same is the case for Hill-Rom. Medtronic experienced modest growth rates on both top and bottom lines in its most recent quarter compared to the same period in the previous fiscal year, and may be the best value prospect of the lot.

We generally don’t like unprofitable companies such as DexCom, and while it is good to see high revenue growth it’s almost worse that the business has not been able to capitalize on more business by reducing its net losses. The cash situation is also a concern. While the insider purchase is enough for us to recommend against looking into a short position, the stock seems like a speculative enough buy that we would avoid it.

Disclosure: I own no shares of any stocks mentioned in this article.