Why DexCom (DXCM) Could Beat Earnings Estimates Again


Looking for a stock that might be in a good position to beat earnings at its next report? Consider DexCom, Inc. (NASD:DXCM), a firm in the Medical Instruments & Supplies industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, DXCM has beaten estimates by at least 10% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, DXCM expected to incur a loss of 16 cents per share, while it actually incurred a loss of 14 per share, a beat of 12.5%. Meanwhile, for the most recent quarter, the company looked to incur a loss of 13 cents per share, when it actually incurred a loss of 8 cents per share instead, representing a 38.5% positive surprise.

Thanks in part to this history, recent estimates have been moving higher for DexCom. In fact, the Earnings ESP for DXCM is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for DXCM, as the firm currently has a Zacks Earnings ESP of 28.57%, so another beat could be around the corner.

This is particularly true when you consider that DXCM has a great Zacks Rank #1 (Strong buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. And when you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that DXCM could see another beat at its next report, especially if recent trends are any guide.

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