Digi International (DGII) AI Stock Analysis

• Market Cap: $1.75B
• Dividend Yield: N/A
• Average Volume (3M): 232.01K
• Price to Earnings (P/E): 43.0
• Beta (1Y): 1.29
• 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: 37,589,333
• 10 Day Avg. Volume: 295,917
• 30 Day Avg. Volume: 232,007
• PEG Ratio: 0.43
• Price to Book (P/B): 2.12
• Price to Sales (P/S): 3.13
• P/FCF Ratio: 12.48
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 4.20
• Enterprise Value/Gross Profit: 6.68
• Enterprise Value/Ebitda: 22.73
• 1Y Price Target: $50.60
• Price Target Upside: 8.70% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: $53.00 ▲(13.86% Upside)

DGII scores well on fundamentals—especially robust free cash flow, strong margins, and improving leverage—supported by positive earnings-call guidance and record ARR/revenue momentum. Technicals are constructive with the stock above key moving averages, though near-overbought signals add some caution. The main offset is valuation, with a high P/E and no dividend yield provided.

Positive Factors

Cash Generation

Sustained high free cash flow and ~1.0x cash conversion to net income provide durable internal funding for capex, R&D, debt reduction, and M&A. Reliable cash generation enhances financial flexibility and lowers execution risk over the next 2–6 months and beyond.

Margin Profile & Profitability

High gross margins and improving operating and net margins signal durable product mix advantages and scalable cost structure. Strong margins support reinvestment and resiliency to cyclical pressures, improving long-term free cash flow conversion and ROI on growth initiatives.

Recurring ARR Growth & Strategic M&A

Robust ARR expansion and the Particle acquisition broaden recurring revenue, developer reach, and enterprise relationships. This strengthens stickiness, cross-sell potential and edge-to-cloud positioning, supporting more predictable revenue streams and scalable ARR-driven margin expansion.

Negative Factors

Uneven Revenue Growth

Intermittent top-line performance creates execution risk: inconsistent revenue trends make forecasting and capacity planning harder, increasing reliance on M&A and ARR to sustain growth. If product cyclicality persists, revenue volatility could pressure long-term margin expansion.

Supply & Memory Pricing Risk

Component cost and sourcing volatility can erode gross margins and disrupt deliveries. For a hardware-heavy IoT provider, prolonged memory or commodity price swings reduce predictability of margins and could force inventory or pricing adjustments, squeezing profitability over the medium term.

Acquisition Near-Term Profitability Drag & Integration Risk

While strategic, Particle's modest initial EBITDA lift and required integration create execution risk; failure to realize synergies or higher integration costs would delay returns. Reliance on M&A for ARR growth increases capital allocation and integration execution importance.

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 cash generation (TTM FCF ~$114M and ~1.0x cash conversion vs. net income) and healthy profitability (gross margin ~62.9%, EBIT margin ~12.7%, net margin ~9.5%) support a high score. Leverage is conservative (TTM debt-to-equity ~0.25) and improving, but uneven revenue growth (including a 2024 decline) keeps the score below top tier.

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	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	430.22M	424.05M	444.85M	388.23M	308.63M
Gross Profit	270.68M	249.91M	252.20M	216.29M	166.66M
EBITDA	84.07M	71.34M	84.11M	75.89M	31.26M
Net Income	40.80M	22.50M	24.77M	19.38M	10.37M
Balance Sheet
Total Assets	922.65M	815.08M	835.53M	853.89M	619.53M
Cash, Cash Equivalents and Short-Term Investments	21.90M	27.51M	31.69M	34.90M	152.43M
Total Debt	171.18M	137.39M	220.91M	258.14M	66.80M
Total Liabilities	286.57M	234.04M	295.04M	352.38M	147.01M
Stockholders Equity	636.08M	581.03M	540.49M	501.51M	472.52M
Cash Flow
Free Cash Flow	107.96M	80.87M	32.41M	35.77M	55.47M
Operating Cash Flow	107.96M	83.09M	36.75M	37.74M	57.72M
Investing Cash Flow	-148.33M	3.00K	-4.34M	-349.53M	-21.36M
Financing Cash Flow	34.62M	-89.05M	-34.50M	192.78M	62.24M

Digi International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 46.55
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 46.55 is above the 20-day moving average (MA) of 43.43, above the 50-day MA of 43.68, and above the 200-day MA of 36.63, indicating a bullish trend. The MACD of 0.57 indicates Negative momentum. The RSI at 61.66 is Neutral, neither overbought nor oversold. The STOCH value of 83.62 is Negative, 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
ITRN	79 Outperform	$893.02M	16.26	28.62%	4.38%	5.20%	9.14%
DGII	76 Outperform	$1.75B	42.95	6.71%	―	1.46%	78.77%
HLIT	74 Outperform	$1.09B	22.87	11.38%	―	1.93%	-43.22%
LTRX	62 Neutral	$245.20M	-23.57	-13.39%	―	-26.85%	-93.91%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
AIOT	60 Neutral	$646.37M	-15.53	-8.98%	―	92.56%	85.10%
NTGR	49 Neutral	$572.88M	-22.18	-4.94%	―	2.95%	-228.28%

Digi International Corporate Events

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.