Digi International (DGII): Assessing Valuation Following Q4 Earnings and Fresh Revenue Guidance

Digi International (DGII) just shared its fourth quarter financials, revealing revenue growth compared to last year but a dip in net income. Along with these results, the company provided guidance for 2026, including projected revenue and recurring revenue gains.

See our latest analysis for Digi International.

Digi International’s latest guidance and double-digit recurring revenue growth targets have kept investors’ attention, helping fuel a strong 22.7% year-to-date share price return and a solid 12.5% total shareholder return over the past year. With momentum clearly building, recent company updates seem to have reinforced optimism around longer-term prospects, even as underlying earnings remain a watchpoint.

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Given Digi International’s ongoing growth and double-digit revenue ambitions, is the current price a bargain for investors, or are expectations for future gains already fully reflected in the stock’s value?

Most Popular Narrative: 11.2% Undervalued

With Digi International’s fair value set by the most popular narrative at $40.50, the latest closing price of $35.97 suggests there is still meaningful upside, according to consensus projections. Investors are watching for whether the anticipated subscription and cloud-driven growth can deliver on these expectations.

The accelerating transition of customers to Digi's subscription-based and recurring revenue solutions, including higher attach rates on IoT products such as cellular routers and infrastructure management devices, points to ongoing double-digit annual recurring revenue (ARR) growth and improved profit margins. This is boosting both revenue stability and long-term earnings. Increased adoption of cloud and hybrid infrastructure, especially as enterprises and data centers pursue AI and edge deployments, is creating heightened demand for Digi's edge connectivity and remote management solutions. This supports higher sales volumes and more premium-priced contracts, which positively impact topline revenue and net margins.

Read the complete narrative.

Want to know the force behind this bullish fair value? There is a key financial forecast that signals a strategic profit surge. Guess what kind of growth and future multiples are being priced in here? Find out what numbers make this valuation tick and explore the next layer to see why expectations are running high for Digi International.

Result: Fair Value of $40.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, flat year-over-year revenue guidance and uncertain regional demand could pressure Digi's growth story if recurring revenue momentum or hardware sales weaken.

Find out about the key risks to this Digi International narrative.

Another View: Multiples Paint a Pricier Picture

While analyst forecasts suggest Digi International has room to run, a look at its valuation through the lens of price-to-earnings tells a different story. The company trades at 31.3x earnings, above both the industry average of 29.3x and the peer average of 24.5x. Its valuation is also notably higher than its fair ratio of 26.3x. This raises the question: Are investors paying too much for Digi International given where the market could gravitate next?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Digi International Narrative

If you have a different perspective or want to dig into the numbers yourself, it takes just a couple of minutes to build your own investment story. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Digi International.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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