NasdaqGS:DGII

Stock Analysis Report

Executive Summary

Digi International Inc. provides Internet of Things connectivity products, services, and solutions in North America, Europe, the Middle East, Africa, and internationally.

Rewards

Earnings are forecast to grow 50.53% per year

Risk Analysis

Highly volatile share price over past 3 months

Large one-off items impacting financial results

Profit margins (2.2%) are lower than last year (4.4%)

Shareholders have been diluted in the past year



Snowflake Analysis

Adequate balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has Digi International's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: DGII's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.8%

DGII

-3.0%

US Communications

0.9%

US Market


1 Year Return

9.9%

DGII

-5.9%

US Communications

20.0%

US Market

Return vs Industry: DGII exceeded the US Communications industry which returned -5.8% over the past year.

Return vs Market: DGII underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

DGIIIndustryMarket
7 Day-0.8%-3.0%0.9%
30 Day-15.3%-3.7%1.4%
90 Day-18.5%3.2%8.8%
1 Year9.9%9.9%-4.0%-5.9%22.5%20.0%
3 Year13.6%13.6%32.8%24.7%49.9%40.3%
5 Year44.7%44.7%59.7%42.0%73.2%54.1%

Price Volatility Vs. Market

How volatile is Digi International's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Digi International undervalued compared to its fair value and its price relative to the market?

76.06x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: DGII ($14.82) is trading above our estimate of fair value ($12.96)

Significantly Below Fair Value: DGII is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: DGII is poor value based on its PE Ratio (76.1x) compared to the Communications industry average (25.6x).

PE vs Market: DGII is poor value based on its PE Ratio (76.1x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: DGII is poor value based on its PEG Ratio (1.5x)


Price to Book Ratio

PB vs Industry: DGII is good value based on its PB Ratio (1.2x) compared to the US Communications industry average (1.9x).


Next Steps

Future Growth

How is Digi International forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

50.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DGII's forecast earnings growth (50.5% per year) is above the savings rate (1.7%).

Earnings vs Market: DGII's earnings (50.5% per year) are forecast to grow faster than the US market (14.6% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: DGII's revenue (14% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: DGII's revenue (14% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if DGII's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Digi International performed over the past 5 years?

-0.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DGII has a large one-off loss of $4.5M impacting its December 31 2019 financial results.

Growing Profit Margin: DGII's current net profit margins (2.2%) are lower than last year (4.4%).


Past Earnings Growth Analysis

Earnings Trend: DGII's earnings have declined by -0.3% per year over the past 5 years.

Accelerating Growth: DGII's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: DGII had negative earnings growth (-49.2%) over the past year, making it difficult to compare to the Communications industry average (-20.3%).


Return on Equity

High ROE: DGII's Return on Equity (1.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Digi International's financial position?


Financial Position Analysis

Short Term Liabilities: DGII's short term assets ($185.0M) exceed its short term liabilities ($61.5M).

Long Term Liabilities: DGII's short term assets ($185.0M) exceed its long term liabilities ($143.1M).


Debt to Equity History and Analysis

Debt Level: DGII's debt to equity ratio (30.2%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if DGII's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: DGII's debt is not well covered by operating cash flow (0.7%).

Interest Coverage: DGII earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: DGII has a low level of unsold assets or inventory.

Debt Coverage by Assets: DGII's debt is covered by short term assets (assets are 1.7x debt).


Next Steps

Dividend

What is Digi International's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage3.0%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate DGII's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate DGII's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if DGII's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if DGII's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of DGII's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure


CEO

Ron Konezny (51yo)

5.2yrs

Tenure

US$2,017,486

Compensation

Mr. Ronald E. Konezny, also known as Ron, has been the Chief Executive Officer and President at Digi International Inc. since December 17, 2014. He serves as the Director of Atlas Financial Holdings Inc. s ...


CEO Compensation Analysis

Compensation vs Market: Ron's total compensation ($USD2.02M) is about average for companies of similar size in the US market ($USD1.68M).

Compensation vs Earnings: Ron's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Ronald Konezny
President5.2yrsUS$2.02m0.85% $3.6m
James Loch
Senior VP0.8yrsUS$1.58m0.0011% $4.7k
Brian Ballenger
Vice President of Finance & Accounting1yrsUS$440.34k0.025% $106.5k
David Sampsell
VP of Corporate Development8.8yrsUS$578.16k0.11% $469.7k
Kevin Riley
President of IoT Solutions1.3yrsUS$1.04m0.23% $987.1k
Michael Ueland
President of IoT Products & Services1.3yrsUS$891.82k0.13% $566.7k
Scott Wilken
Vice President of Technology2.3yrsno datano data
Tracy Roberts
CIO & VP of Technology Services6.6yrsno data0.092% $395.2k

1.8yrs

Average Tenure

51yo

Average Age

Experienced Management: DGII's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Ronald Konezny
President5.2yrsUS$2.02m0.85% $3.6m
Christopher Heim
Independent Director2.1yrsUS$189.42k0.091% $391.5k
Sally Smith
Independent Director2.1yrsUS$189.42k0.078% $332.2k
Satbir Khanuja
Independent Non-Executive Chairman of the Board2.1yrsUS$226.09k0.20% $871.5k
Spiro Lazarakis
Independent Director4.6yrsUS$195.09k0.15% $662.2k
Hatem Naguib
Independent Director1yrsUS$170.93kno data

2.1yrs

Average Tenure

53yo

Average Age

Experienced Board: DGII's board of directors are not considered experienced ( 2.1 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: DGII insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.2%.


Top Shareholders

Company Information

Digi International Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Digi International Inc.
  • Ticker: DGII
  • Exchange: NasdaqGS
  • Founded: 1985
  • Industry: Communications Equipment
  • Sector: Tech
  • Market Cap: US$428.151m
  • Shares outstanding: 28.89m
  • Website: https://www.digi.com

Number of Employees


Location

  • Digi International Inc.
  • 9350 Excelsior Boulevard
  • Suite 700
  • Hopkins
  • Minnesota
  • 55343
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DGIINasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDOct 1989
DGIDB (Deutsche Boerse AG)YesCommon StockDEEUROct 1989

Biography

Digi International Inc. provides Internet of Things connectivity products, services, and solutions in North America, Europe, the Middle East, Africa, and internationally. The company operates in two segments, IoT Products & Services and IoT Solutions. It offers cellular routers that provide connectivity for devices over a cellular data network; cellular gateway products that enable devices or groups of devices to be networked in locations where there is no existing network or where access to a network is prohibited; radio frequency products that utilize a range of wireless protocols for PC-to-device or device-to-device connectivity; and Connect, Rabbit, and ARM-based embedded systems on module and single board computers for medical, transportation, and industrial device manufacturers. The company also provides console and serial servers, as well as universal serial bus (USB)-to-serial converters, USB over Internet protocol products, and multiport USB hubs. In addition, it offers cellular remote management products that provide cellular router technology and device management solutions; Digi Remote Manager, a centralized remote device management solution to meet service level commitments and stay compliant with payment card industry data security standards, as well as to monitor, diagnose, and fix remote devices; turn-key wireless networking product development, testing, and certification for wireless technology platforms and applications; and implementation planning, application development, on-site support, installation, and customer training services. Further, it provides SmartSense by Digi, a system that enables customers in food service, healthcare, transportation/logistics, and education to monitor the temperature of food and other perishable goods; and to track the completion of operating tasks by employees, as well as to have visibility in the supply chain to product temperature. The company was founded in 1985 and is headquartered in Hopkins, Minnesota. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 23:37
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/09/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.