Record 25.6% operating margins meet 21% of 52-week high pricing — quality on sale when growth slows from 15.6% to 4.2%.

A textbook quality business at record profitability selling at distressed prices — when Mr. Market panics at growth deceleration, he creates opportunity.

Does this business have durable competitive advantages that protect its economics?

This framework sees a widening moat. Margins are expanding while competitors struggle, and the business shows rare pricing power that actually strengthens with inflation. When patients depend on your product for daily health monitoring, switching becomes more than inconvenient — it becomes dangerous.

How much cash does this business really generate for its owners?

Applying this lens reveals exceptional cash generation. The business throws off over a billion in real owner earnings with minimal stock dilution — exactly the kind of cash machine this framework prizes. Low and declining stock compensation shows management isn't picking shareholders' pockets.

If you bought the whole company today, would the earnings justify the price?

This framework suggests the market has overcorrected. While the earnings yield spread is negative, the company trades well below its own historical valuation range despite achieving record profitability. At one-third of its typical valuation percentile with the best fundamentals ever, the math works for a patient owner.

Can this business deploy capital at high rates of return?

Through this lens, we see a business finally learning to generate returns. While ROIC remains below the cost of capital, the trajectory is remarkable — from destroying value to approaching value creation. The high operating leverage means each dollar reinvested has outsized impact.

Applying this framework reveals a wonderful business temporarily mispriced by a market that confuses deceleration with deterioration. DexCom has achieved record margins, generates over a billion in owner earnings, and trades at one-third its typical valuation despite the best fundamentals in company history. The moat is widening even as growth slows — exactly the kind of mature compounder this framework seeks. When insiders buy $21 million worth of stock at distressed valuations, are they seeing what Mr. Market is missing?

This analysis applies Warren Buffett's published investment framework to publicly available financial data. It is not authored by, endorsed by, or affiliated with Warren Buffett. Educational purposes only. Not financial advice.