Insulet has had an impressive run over the past six months as its shares have beaten the S&P 500 by 18%. The stock now trades at $337, marking a 35.7% gain. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy PODD? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Is Insulet a Good Business?
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
We can better understand Patient Monitoring companies by analyzing their constant currency 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 26.4% 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
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Insulet’s margin expanded by 25.4 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 16.8%.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative 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 we think Insulet is a great business, and with its shares topping the market in recent months, the stock trades at 71.2× forward P/E (or $337 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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