DexCom, Inc.DXCMNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics Financials Growth Insiders

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $80.53 per share(market-calibrated)

+10.4%

Upside to Fair Value

Current

$72.97

Pure Model

$79.50

Fair Value

$80.53

Bull Case

$109.74

Bear Case

$55.07

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

6.04%

Calibrated Growth

3.46%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $79.50.

What's Driving This Ratingfor DXCM

↓

CapEx normalizing toward maintenance

Historical CapEx is 7.35% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$463M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 28.79% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

↑

Strong near-term revenue growth

Analyst consensus projects 12.17% revenue growth in Year 1, fading to 14.02% by Year 5 and 3.00% by Year 10. Revenue reaches $12.0B by Year 10 (vs $4.7B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $51.94/share (13.1x terminal FCF) while exit multiple gives $107.06/share (36.2x terminal FCF). The 24x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $72.97, the market implies 6.04% perpetual growth — 304bps above the model's 3.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 66.24% indicates efficient cash generation. FCF reaches $2.6B by Year 10 (21.67% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.53

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)11.37%

Cost of Debt

Pre-tax Cost of Debt1.10%

Tax Rate23.16%

After-tax Cost of Debt0.85%

Equity Weight (E/V)95.35%

Debt Weight (D/V)4.65%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (95.35% × 11.37%) + (4.65% × 0.85%)

= 10.88%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$5.2B	$6.6B	$8.4B	$10.3B	$12.0B
EBIT	$1.5B	$1.9B	$2.4B	$3.0B	$3.5B
Tax	$349M	$438M	$563M	$690M	$803M
NOPAT	$1.2B	$1.5B	$1.9B	$2.3B	$2.7B
+ Depreciation	$205M	$257M	$331M	$405M	$472M
- Capex	$384M	$426M	$476M	$495M	$421M
- Δ NWC	$170M	$207M	$311M	$272M	$105M
Free Cash Flow	$807M	$1.1B	$1.4B	$1.9B	$2.6B
Discount Factor	0.902	0.734	0.597	0.485	0.356
Present Value	$728M	$789M	$842M	$935M	$929M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.6B

Terminal Growth Rate3.00%

WACC10.88%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$34.1B

PV of Terminal Value$12.1B

Exit Multiple Method

Year 10 EBITDA$3.9B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$94.5B

PV of Terminal Value$33.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.6B

PV of Terminal Value$12.1B

Enterprise Value$20.7B

(-) Net Debt$472M

Equity Value$20.3B

Shares Outstanding390M

Price per Share$51.94

Exit Multiple Method

PV of Projected FCFs$8.6B

PV of Terminal Value$33.7B

Enterprise Value$42.2B

(-) Net Debt$472M

Equity Value$41.8B

Shares Outstanding390M

Price per Share$107.06

Pure Model Fair Value

$79.50

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
8.88%	$96.18	$97.96	$100.03	$102.49	$105.45
9.88%	$86.08	$87.31	$88.73	$90.36	$92.27
10.88%	$77.61	$78.50	$79.50	$80.63	$81.93
11.88%	$70.36	$71.02	$71.75	$72.57	$73.49
12.88%	$64.08	$64.58	$65.13	$65.73	$66.41

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$55.07

-24.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.91

Base Case

$79.50

8.9% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.53

Bull Case

$109.74

50.4% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth12.17%

Year 3 Revenue Growth11.78%

Year 5 Revenue Growth14.02%

Year 7 Revenue Growth9.61%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin28.79%

Tax Rate23.16%

Historical Capex / Rev7.35%

Terminal Capex / Rev3.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance