What a brutal six months it’s been for Insulet. The stock has dropped 33.8% and now trades at $204.57, rattling many shareholders. This may have investors wondering how to approach the situation.

Given the weaker price action, is now the time to buy PODD? Find out in our full research report, it’s free.

Why Are We Positive On PODD?

Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ: PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.

1. Constant Currency Revenue Propels Growth

Investors interested in Patient Monitoring companies should track constant currency revenue in addition to reported revenue. This metric excludes currency movements, which are outside of Insulet’s control and are not indicative of underlying demand.

Over the last two years, Insulet’s constant currency revenue averaged 25.9% year-on-year growth. This performance was fantastic and shows it can expand quickly on a global scale regardless of the macroeconomic environment.

2. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Insulet’s margin expanded by 30.1 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Insulet’s free cash flow margin for the trailing 12 months was 13.7%.

3. New Investments Bear Fruit as ROIC Jumps

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Insulet’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Final Judgment

These are just a few reasons why Insulet ranks highly on our list. With the recent decline, the stock trades at 32.7× forward P/E (or $204.57 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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