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Digi International (DGII) AI Stock Analysis

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Digi International

(NASDAQ:DGII)

Select Model

Outperform 83 (OpenAI - 5.2)

Rating:83Outperform

Price Target:

$85.00

▲(26.96% Upside)

Action:Reiterated

Date:08/06/26

DGII scores strongly on financial performance and earnings-call momentum, supported by exceptional recent free cash flow, healthy margins, low leverage, and raised forward guidance with accelerating ARR. Technicals are also positive with price above major moving averages and a positive MACD, though the high P/E (~60) tempers the score due to valuation risk.

Positive Factors

Cash generation

Exceptional trailing-twelve-month cash generation and a ~67% FCF surge indicate durable internal funding for R&D, M&A, and working capital. High cash conversion (>100% year-to-date) reduces reliance on external financing and supports reinvestment while enabling balance-sheet optionality over multiple quarters.

Negative Factors

Supply-chain constraints

Persistent component shortages can limit shipment cadence, delay customer deployments and force rushed procurement at higher cost. Over multiple quarters this can reduce revenue visibility, introduce execution risk for design-win timelines, and compress margins if higher-cost components are used or orders are deferred.

Read all positive and negative factors

Positive Factors

Negative Factors

Cash generation

Read all positive factors

Digi International Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Breaks down income from various business areas, helping investors see which segments are growing and contributing most to the company's top line.

Chart InsightsIOT Solutions has been the faster-growing line, accelerating in the past year to become a material contributor—this signals a shift from one‑off hardware sales toward higher-value, repeatable offerings that should boost revenue predictability and margin resilience. IOT Products & Services showed a multi‑quarter plateau after its 2022–23 peak but reaccelerated into early‑2026, consistent with a cyclical recovery or improved attach rates. Together, the mix shift toward solutions represents a strategic inflection that could reduce revenue volatility and support multiple expansion if sustained.

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The Fly

Digi International (DGII) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$3.23B

Dividend YieldN/A

Average Volume (3M)410.15K

Price to Earnings (P/E)65.5

Beta (1Y)1.35

Revenue Growth20.26%

EPS Growth11.95%

CountryUS

Employees913

SectorTechnology

Sector Strength88

IndustryCommunication Equipment

Share Statistics

EPS (TTM)1.30

Shares Outstanding37,948,124

10 Day Avg. Volume380,484

30 Day Avg. Volume410,146

Financial Highlights & Ratios

PEG Ratio0.43

Price to Book (P/B)2.12

Price to Sales (P/S)3.13

P/FCF Ratio12.79

Enterprise Value/Market Cap<0.01

Enterprise Value/Revenue<0.01

Enterprise Value/Gross Profit<0.01

Enterprise Value/Ebitda<0.01

Forecast

1Y Price Target

$85.40

Price Target Upside27.56% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

EPS Forecast (FY)2.45

Revenue Forecast (FY)$521.61M

Digi International Business Overview & Revenue Model

Company Description

Digi International Inc. is a global leader in providing essential Internet of Things (IoT) products, services, and complete solutions for mission-critical business applications. The company operates through two primary divisions: IoT Products & Se...

How the Company Makes Money

Digi International primarily makes money by selling IoT connectivity hardware and associated software/services that support deployment, operation, and management of connected devices. 1) Product (hardware) revenue: A significant portion of revenu...

Digi International Earnings Call Summary

Earnings Call Date:Aug 05, 2026

(Q3-2026)

% Change Since: |

Next Earnings Date:Nov 18, 2026

Earnings Call Sentiment Positive

The call presented strong operational and financial momentum: record quarterly revenue, robust gross margins, record adjusted EBITDA margin, accelerating ARR, improved cash flow, reduced net debt and constructive M&A integration. Management raised both quarterly and full-year guidance and highlighted product, solutions and AI-driven demand. Headwinds discussed were manageable: supply chain constraints, potential margin mix variability, longer sales cycles for hyperscalers, and days-to-win not fully normalized. Overall the positives substantially outweigh the risks.

Positive Updates

Record Quarterly Revenue

Reported Q3 revenue of $139 million, up 29% year-over-year, and management characterized the quarter as a record result.

Negative Updates

Supply Chain Risks and Volatility

Management noted ongoing supply chain challenges (memory constraints and spreading component issues) that create urgency in ordering but could also constrain deliveries and add uncertainty to timing.

Read all updates

Q3-2026 Updates

Positive

Negative

Record Quarterly Revenue

Reported Q3 revenue of $139 million, up 29% year-over-year, and management characterized the quarter as a record result.

Read all positive updates

Company Guidance

In the call management raised forward guidance after a strong Q3 beat: Q3 revenue was $139.0M (+29% YoY) with 64.8% gross margin, $33M cash from operations (+38% YoY), record ARR of $191M, and adjusted EBITDA of $40M (29.1% margin); for Q4 they forecast revenue $138–142M, adjusted EBITDA $40–41.5M and adjusted EPS $0.75–0.78 on ~39.1M shares; full-year guidance was raised to $529–533M revenue (+23.5% YoY), adjusted EBITDA $146–147.5M (+35.5% YoY), adjusted EPS $2.67–2.70, ARR growth of at least 27% (annualized ARR ≈ $193M), net debt ~$81M (leverage well below 1x), and management noted cash conversion >100% and continued operating leverage driving profits faster than revenue.

Digi International Financial Statement Overview

Summary

Strong fundamentals led by standout cash generation (TTM operating cash flow ~$216M and free cash flow ~$212M; FCF up ~67%). Profitability is healthy (TTM gross margin ~63.8%, net margin ~9.6%) and leverage is conservative (~0.17x debt-to-equity) with improving ROE (~7.4%). Key watch-outs are some recent operating margin softening versus the prior annual peak and historical volatility in leverage/cash conversion.

Income Statement

Positive

Balance Sheet

Very Positive

Cash Flow

Very Positive

Breakdown	TTM	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	506.21M	430.22M	424.05M	444.85M	388.23M	308.63M
Gross Profit	323.07M	270.68M	249.91M	252.20M	216.29M	166.66M
EBITDA	99.43M	84.07M	71.34M	84.11M	75.89M	31.26M
Net Income	48.73M	40.80M	22.50M	24.77M	19.38M	10.37M
Balance Sheet
Total Assets	964.35M	922.65M	815.08M	835.53M	853.89M	619.53M
Cash, Cash Equivalents and Short-Term Investments	27.97M	21.90M	27.51M	31.69M	34.90M	152.43M
Total Debt	118.39M	179.85M	137.39M	220.91M	258.14M	66.80M
Total Liabilities	279.20M	286.57M	234.04M	295.04M	352.38M	147.01M
Stockholders Equity	685.15M	636.08M	581.03M	540.49M	501.51M	472.52M
Cash Flow
Free Cash Flow	135.16M	105.33M	80.87M	32.41M	35.77M	55.47M
Operating Cash Flow	138.70M	107.96M	83.09M	36.75M	37.74M	57.72M
Investing Cash Flow	-196.75M	-148.33M	3.00K	-4.34M	-349.53M	-21.36M
Financing Cash Flow	66.09M	34.62M	-89.05M	-34.50M	192.78M	62.24M

Digi International Technical Analysis

Technical Analysis Sentiment

Positive

Last Price66.95

Price Trends

50DMA

70.68

Positive

100DMA

64.33

Positive

200DMA

54.24

Positive

Market Momentum

MACD

4.63

Negative

RSI

76.15

Negative

STOCH

90.46

Negative

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 66.95 is below the 20-day moving average (MA) of 73.49, below the 50-day MA of 70.68, and above the 200-day MA of 54.24, indicating a bullish trend. The MACD of 4.63 indicates Negative momentum. The RSI at 76.15 is Negative, neither overbought nor oversold. The STOCH value of 90.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGII.

Digi International Risk Analysis

Digi International disclosed 39 risk factors in its most recent earnings report. Digi International reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Digi International Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRN	86 Outperform	$1.06B	16.48	29.94%	5.48%	15.79%	15.69%
DGII	83 Outperform	$3.23B	65.48	7.39%	―	20.26%	11.95%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
HLIT	60 Neutral	$1.51B	-33.14	-12.23%	―	-28.05%	-171.21%
AIOT	57 Neutral	$417.44M	-22.68	-3.92%	―	15.14%	52.80%
NTGR	57 Neutral	$656.37M	-16.66	-8.42%	―	-0.70%	-141.66%
LTRX	55 Neutral	$288.62M	-38.77	-8.79%	―	-17.17%	23.08%

* Technology Sector Average

Performance Comparison

DGII

Digi International

85.12

51.66

154.39%

HLIT

Harmonic

13.92

4.87

53.81%

AIOT

Powerfleet

3.11

-1.47

-32.10%

ITRN

Ituran Location And Control

53.39

15.61

41.31%

LTRX

Lantronix

6.47

3.04

88.63%

NTGR

Netgear

24.15

-0.49

-1.99%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 06, 2026