Trade-Ideas LLC identified

DexCom

(

DXCM

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified DexCom as such a stock due to the following factors:

  • DXCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.1 million.
  • DXCM has traded 69,908 shares today.
  • DXCM is trading at 2.99 times the normal volume for the stock at this time of day.
  • DXCM is trading at a new low 3.06% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DXCM:

DexCom, Inc., a medical device company, focuses on the design, development, and commercialization of continuous glucose monitoring systems in the United States and internationally. Currently there are 11 analysts that rate DexCom a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for DexCom has been 1.0 million shares per day over the past 30 days. DexCom has a market cap of $5.5 billion and is part of the health care sector and health services industry. The stock has a beta of 0.22 and a short float of 3.9% with 3.23 days to cover. Shares are down 13.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates DexCom as a

sell

. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from the ratings report include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, DEXCOM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DEXCOM INC is currently very high, coming in at 72.09%. Regardless of DXCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DXCM's net profit margin of 1.14% is significantly lower than the industry average.
  • DEXCOM INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DEXCOM INC reported poor results of -$0.73 versus -$0.32 in the prior year. This year, the market expects an improvement in earnings (-$0.31 versus -$0.73).
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • DXCM's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.83, which clearly demonstrates the ability to cover short-term cash needs.

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