Digi International (DGII) AI Stock Analysis

• Market Cap: $1.80B
• Dividend Yield: N/A
• Average Volume (3M): 288.94K
• Price to Earnings (P/E): 34.5
• Beta (1Y): 1.23
• Revenue Growth: 1.46%
• EPS Growth: 78.77%
• Country: US
• Employees: 805
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 0.56
• Shares Outstanding: 37,611,160
• 10 Day Avg. Volume: 266,100
• 30 Day Avg. Volume: 288,941
• PEG Ratio: 0.43
• Price to Book (P/B): 2.12
• Price to Sales (P/S): 3.13
• P/FCF Ratio: 12.79
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 4.28
• Enterprise Value/Gross Profit: 6.80
• Enterprise Value/Ebitda: 20.54
• 1Y Price Target: $51.25
• Price Target Upside: 7.24% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 2.31
• Revenue Forecast (FY): $479.12M

• Rating: 76 Outperform
• Price Target: $57.00 ▲(19.27% Upside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 03/06/26

The score is driven primarily by strong financial performance (high margins, improved profitability, and robust free cash flow with moderate-to-low leverage) and a favorable earnings outlook with growth-oriented FY2026 guidance and strong ARR/EBITDA momentum. Technicals add support via a clear uptrend. The main offset is valuation (high P/E and no dividend yield provided), with corporate events modestly supportive.

Positive Factors

Free cash flow strength

Sustained high free cash flow with ~1.0x conversion to net income provides durable internal funding for R&D, M&A, dividends or debt reduction. Strong cash generation improves financial optionality, supports reinvestment in software and services, and reduces reliance on external financing.

Recurring revenue / ARR momentum

Rapid ARR growth boosts revenue visibility and recurring margin mix, strengthening long-term cash flow and valuation quality. Durable subscription and service revenue reduces cyclicality from one-time hardware sales and supports scalable gross margins and higher lifetime customer value.

Conservative balance sheet & liquidity

Low leverage and improving equity provide financial flexibility to fund strategic initiatives and weather downturns. A conservative capital structure plus expanded revolver options reduces refinancing risk and enables opportunistic M&A while preserving investment-grade-like stability.

Negative Factors

Uneven revenue growth

Inconsistent top-line performance, including a 2024 revenue decline, undermines predictability of scale benefits and returns. Variable revenue growth complicates long-term planning, makes margin and cash-flow sustainability harder to forecast, and raises execution risk for growth targets.

Supply & memory pricing volatility

Material component cost volatility can compress gross margins and disrupt delivery schedules for hardware-dependent products. Persistent supply-chain and memory-price swings create structural margin and working-capital risk that could erode profitability and slow recurring attach rates over months.

Particle acquisition: modest near-term EBITDA, integration risk

While strategically expanding edge-to-cloud offerings, the acquisition’s small initial EBITDA contribution and expected multi-year synergies create near-term earnings dilution risk. Successful integration is required to realize scale, and execution delays or customer churn could limit structural benefit.

Digi International Business Overview & Revenue Model

Company Description

Digi International Inc. provides business and mission-critical Internet of Things (IoT) products, services, and solutions in the United States and internationally. The company operates in two segments, IoT Products & Services and IoT Solutions. It offers cellular routers for mission-critical wireless connectivity; cellular modules to embed cellular communications abilities into the products to deploy and manage intelligent and secure cellular connected products; console servers to provide secure and remote access to network equipment in data centers and at edge locations; and radio frequency products, including embedded wireless modules, off-the-shelf gateways, modems, and adapters under the Digi XBee brand. The company provides embedded system products under the Digi Connect, ConnectCore, and Rabbit brands; and infrastructure management products, comprising of serial servers, which offers serial port-to-Ethernet integration of devices into wired Ethernet networks; and universal serial bus solutions. In addition, it offers Digi Remote Manager, a recurring revenue cloud-based service that provides a secure environment for customers to manage their connected device deployment; Digi Wireless Design Services; and SmartSense by Digi for monitoring wirelessly the temperature of food and other perishable or sensitive goods, monitor facilities or pharmacies by tracking the completion of operating tasks by employees, as well as quality control and incident management for food service, healthcare, and transportation/logistics industries. Further, the company provides professional services, such as site planning, implementation management, application development, and customer training; data plan subscriptions; and enhanced technical support services. Digi International Inc. was incorporated in 1985 and is headquartered in Hopkins, Minnesota.

How the Company Makes Money

Digi International generates revenue through multiple streams, primarily by selling IoT hardware, including cellular routers and embedded modules, which are crucial for establishing connectivity in various applications. Additionally, the company earns income from software solutions that assist customers in managing their IoT devices and analyzing the data they generate. Digi also offers subscription-based services for its device management platforms, which provide ongoing revenue. Key partnerships with telecommunications providers and technology companies enhance its offerings and market reach, contributing significantly to its earnings. Furthermore, the growing demand for IoT solutions across multiple sectors continues to drive revenue growth for Digi International.

Digi International Financial Statement Overview

Summary

Strong profitability and cash generation support a high score: ~62.9% gross margin, improving net margin (~9.5% TTM), and robust free cash flow (~$114M TTM) with ~1.0x FCF-to-net-income conversion. Leverage is moderate-to-low (debt-to-equity ~0.25) and improving. Main constraint is uneven revenue growth (2024 decline and inconsistent top-line trajectory).

Income Statement

DGII shows solid profitability and improving efficiency. In TTM (Trailing-Twelve-Months), revenue grew 4.3% with strong gross margin (~62.9%) and healthy operating profitability (EBIT margin ~12.7%; EBITDA margin ~20.6%). Net margin also improved to ~9.5% versus ~5–6% in prior years, indicating better cost control and/or mix. The main weakness is growth consistency: revenue declined in 2024 (about -4.7%) and the latest annual growth was close to flat, so the top-line trajectory is positive but not steady.

Balance Sheet

The balance sheet looks conservative with manageable leverage. TTM (Trailing-Twelve-Months) debt-to-equity is ~0.25, down meaningfully from higher levels in 2022–2023, and equity has increased over time. Returns on equity have improved to ~6.7% TTM (from ~2–5% historically), but still sit in a moderate range, suggesting profitability is good but not yet exceptional relative to the capital base. Overall strength is financial flexibility; the key watch-out is that returns remain mid-tier.

Cash Flow

Cash generation is a clear strength. TTM (Trailing-Twelve-Months) operating cash flow is ~$113.9M and free cash flow is ~$114.4M, with free cash flow up ~6.0%. Cash conversion is excellent, with free cash flow roughly matching net income (about 1.0x), supporting earnings quality. Historical volatility exists (notably weaker cash generation in 2022–2023), but the last two periods show a strong rebound and improved consistency.

Breakdown	TTM	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	448.82M	430.22M	424.05M	444.85M	388.23M	308.63M
Gross Profit	282.67M	270.68M	249.91M	252.20M	216.29M	166.66M
EBITDA	93.53M	84.07M	71.34M	84.11M	75.89M	31.26M
Net Income	42.43M	40.80M	22.50M	24.77M	19.38M	10.37M
Balance Sheet
Total Assets	918.44M	922.65M	815.08M	835.53M	853.89M	619.53M
Cash, Cash Equivalents and Short-Term Investments	30.93M	21.90M	27.51M	31.69M	34.90M	152.43M
Total Debt	154.28M	179.85M	137.39M	220.91M	258.14M	66.80M
Total Liabilities	269.23M	286.57M	234.04M	295.04M	352.38M	147.01M
Stockholders Equity	649.20M	636.08M	581.03M	540.49M	501.51M	472.52M
Cash Flow
Free Cash Flow	113.99M	105.33M	80.87M	32.41M	35.77M	55.47M
Operating Cash Flow	113.87M	107.96M	83.09M	36.75M	37.74M	57.72M
Investing Cash Flow	-147.39M	-148.33M	3.00K	-4.34M	-349.53M	-21.36M
Financing Cash Flow	38.22M	34.62M	-89.05M	-34.50M	192.78M	62.24M

Digi International Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 47.79
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGII, the sentiment is Neutral. The current price of 47.79 is below the 20-day moving average (MA) of 49.55, above the 50-day MA of 46.75, and above the 200-day MA of 39.44, indicating a neutral trend. The MACD of 0.55 indicates Positive momentum. The RSI at 45.63 is Neutral, neither overbought nor oversold. The STOCH value of 35.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DGII.

Digi International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRN	82 Outperform	$966.63M	14.75	28.06%	4.38%	5.20%	9.14%
DGII	76 Outperform	$1.80B	34.52	6.76%	―	1.46%	78.77%
HLIT	62 Neutral	$992.18M	-25.95	-10.08%	―	1.93%	-43.22%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LTRX	55 Neutral	$215.13M	-43.34	-12.36%	―	-26.85%	-93.91%
AIOT	52 Neutral	$374.27M	-52.83	-6.94%	―	92.56%	85.10%
NTGR	50 Neutral	$585.88M	-11.36	-6.37%	―	2.95%	-228.28%

Digi International Corporate Events

Digi International Grants Performance-Based Equity Awards to Executives

On February 27, 2026, Digi International’s compensation committee approved supplemental, performance-based equity awards for two senior executives under its 2021 Omnibus Incentive Plan, tying stock unit vesting to multi-year operational and integration milestones. Chief Financial Officer James J. Loch was granted performance stock units convertible into 14,668 shares, vesting in tranches from November 2026 through November 2028 contingent on achieving specified business and software integration goals.

Executive Vice President and General Counsel David H. Sampsell received performance stock units for up to 12,223 shares, vesting as of December 31, 2028 based on his role in identifying and onboarding successors for the general counsel and corporate development leadership positions. The structure of these awards underscores Digi’s effort to align executive incentives with the successful completion of a multi-year software platform migration and leadership transition, reinforcing continuity in its operations and long-term strategic initiatives.

The most recent analyst rating on (DGII) stock is a Hold with a $55.00 price target. To see the full list of analyst forecasts on Digi International stock, see the DGII Stock Forecast page.

Digi International Expands Revolving Credit Facility and Flexibility

On December 23, 2025, Digi International, Inc. amended its existing revolving credit agreement with BMO Bank N.A. and a syndicate of lenders, revising the pricing structure and expanding its potential borrowing capacity. The amendment introduced a fifth pricing tier tied to a higher total net leverage ratio, generally reduced applicable margin percentages for both Term SOFR and base rate loans at lower leverage levels, eliminated the 10-basis-point credit spread adjustment on Term SOFR loans, and increased the uncommitted accordion feature for additional borrowing from the greater of $95 million to the greater of $105 million or one hundred percent of trailing twelve-month adjusted EBITDA, thereby enhancing Digi’s financial flexibility and potentially lowering its interest costs over time.

The most recent analyst rating on (DGII) stock is a Buy with a $45.00 price target. To see the full list of analyst forecasts on Digi International stock, see the DGII Stock Forecast page.