Digi International (DGII) AI Stock Analysis

• Market Cap: $1.21B
• Dividend Yield: N/A
• Average Volume (3M): 154.05K
• Price to Earnings (P/E): 28.5
• Beta (1Y): 1.23
• Revenue Growth: -2.37%
• EPS Growth: 147.46%
• Country: US
• Employees: 805
• Sector: Technology
• Sector Strength: 98
• Industry: Communication Equipment
• EPS (TTM): 0.53
• Shares Outstanding: 37,122,180
• 10 Day Avg. Volume: 184,058
• 30 Day Avg. Volume: 154,052
• PEG Ratio: -4.38
• Price to Book (P/B): 1.72
• Price to Sales (P/S): 2.36
• P/FCF Ratio: 12.36
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 3.21
• Enterprise Value/Gross Profit: 5.37
• Enterprise Value/Ebitda: 16.80
• 1Y Price Target: $35.80
• Price Target Upside: 10.15% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 71 Outperform
• Price Target: $36.00 ▲(10.77% Upside)

Digi International's overall stock score is driven by strong financial performance and a positive earnings call outlook. However, mixed technical indicators and moderate valuation temper the score. The company's ability to manage debt and generate cash flow is a significant strength, but attention to revenue growth and market conditions is necessary.

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 hardware products such as routers, gateways, and other connectivity devices. Additionally, the company offers subscription-based services that provide ongoing revenue through its IoT management platform, which enables customers to monitor and manage their IoT deployments effectively. Key revenue streams also include providing professional services, such as installation and technical support. Partnerships with major telecommunications companies and technology providers bolster Digi's market presence and enhance its product offerings, contributing significantly to its earnings.

Digi International Financial Statement Overview

Summary

Digi International demonstrates strong financial health with robust profitability and operational efficiency. The balance sheet shows low leverage, reflecting financial stability, while substantial cash flows enhance financial flexibility. However, a slight revenue decline requires attention for sustained growth.

Income Statement

Digi International shows a strong income statement with consistent profitability improvements. The TTM gross profit margin is 59.85%, and the net profit margin is 10.06%, indicating efficient cost management and a healthy bottom line. However, the revenue growth has slowed, with a slight decline of 1.28% compared to the previous year. EBIT and EBITDA margins are robust at 13.11% and 19.12%, respectively, highlighting operational efficiency.

Balance Sheet

The company's balance sheet is strong with a low debt-to-equity ratio of 0.14, reflecting conservative leverage. Return on equity is solid at 6.96%, demonstrating effective use of shareholders' funds. The equity ratio stands at 77.48%, suggesting a stable financial structure with a substantial equity base. Overall, the balance sheet indicates low financial risk and strong capital management.

Cash Flow

Digi International's cash flow statements indicate strong cash generation capabilities. The free cash flow grew by 29.61% year-over-year, and the operating cash flow to net income ratio is a robust 2.55, indicating strong operational cash flow relative to net income. Furthermore, the free cash flow to net income ratio is an impressive 2.49, underscoring the company's ability to convert earnings into cash efficiently.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	418.62M	424.05M	444.85M	388.23M	308.63M	279.27M
Gross Profit	250.60M	249.91M	252.20M	216.29M	166.66M	143.97M
EBITDA	80.04M	71.34M	84.11M	72.17M	38.77M	33.38M
Net Income	42.15M	22.50M	24.77M	19.38M	10.37M	8.41M
Balance Sheet
Total Assets	781.02M	815.08M	835.53M	853.89M	619.53M	528.68M
Cash, Cash Equivalents and Short-Term Investments	26.30M	27.51M	31.69M	34.90M	152.43M	54.13M
Total Debt	82.95M	137.39M	220.91M	15.52M	66.80M	79.67M
Total Liabilities	175.81M	234.04M	295.04M	352.38M	147.01M	157.18M
Stockholders Equity	605.22M	581.03M	540.49M	501.51M	472.52M	371.50M
Cash Flow
Free Cash Flow	104.81M	80.87M	32.41M	35.77M	55.47M	33.58M
Operating Cash Flow	107.37M	83.09M	36.75M	37.74M	57.72M	34.48M
Investing Cash Flow	-2.56M	3.00K	-4.34M	-349.53M	-21.36M	-137.00M
Financing Cash Flow	-102.39M	-89.05M	-34.50M	192.78M	62.24M	63.60M

Digi International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 32.50
• 50DMA: Negative
• 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 Positive. The current price of 32.5 is below the 20-day moving average (MA) of 32.81, below the 50-day MA of 33.61, and above the 200-day MA of 31.35, indicating a neutral trend. The MACD of -0.48 indicates Positive momentum. The RSI at 46.59 is Neutral, neither overbought nor oversold. The STOCH value of 40.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGII.

Digi International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HLIT	75 Outperform	$995.40M	14.96	16.36%	―	24.14%	16.17%
DGII	71 Outperform	$1.21B	28.50	7.21%	―	-2.37%	147.46%
NTGR	65 Neutral	$731.60M	11.71	12.97%	―	0.76%	―
Sector *	61 Neutral	$35.87B	6.13	-9.30%	2.06%	7.63%	-6.38%
VSAT	61 Neutral	$3.44B	―	-12.48%	―	-1.43%	43.14%
AIOT	60 Neutral	$516.43M	―	-9.14%	―	119.36%	86.58%
COMM	59 Neutral	$3.38B	―	17.08%	―	-11.03%	91.98%

Digi International Corporate Events

Digi International Board Restructures for IoT Focus

Digi International announced the retirement of Sally J. Smith from its Board of Directors, effective after the 2025 Annual Meeting of Stockholders, and the nomination of two new members, Valerie Heusinkveld and Allison West Hughes, to the Board. This strategic move aims to leverage their extensive expertise in technology, finance, and marketing to enhance Digi’s focus on IoT advancements and recurring revenue-based solutions, strengthening its industry position and stakeholder value.