Fact based stock research
Digi International (NasdaqGS:DGII)

US2537981027

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Digi International stock research in summary

digi.com

ANALYSIS: With an Obermatt Combined Rank of 14 (worse than 86% compared with investment alternatives), Digi International (Communications Equipment, USA) shares have lower financial characteristics compared with similar stocks. Shares of Digi International are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives), and are riskily financed (Safety Rank of 41, which means above-average debt burdens) but show above-average growth (Growth Rank of 53). ...read more

RECOMMENDATION: A Combined Rank of 14, is a sell recommendation based on Digi International's financial characteristics. As the company Digi International shows low value with an Obermatt Value Rank of 23 (77% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 53% of comparable companies (Obermatt Growth Rank is 53). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 41 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Digi International, even a low-value company (in terms of its key financial indicators) can be a good investment. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	23
Growth Rank	53
Safety Rank	41
Combined Rank	14

Country	USA
Industry	Communications Equipment
Index	NASDAQ
Size class	Medium

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Digi International

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	31	45	37	23
GROWTH
GROWTH	71	95	43	53
SAFETY
SAFETY	50	85	52	41
SENTIMENT
SENTIMENT	n/a	94	92	^new
360° VIEW
360° VIEW	n/a	96	78	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Digi International is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	31	45	37	23
GROWTH
GROWTH	71	95	43	53
SAFETY
SAFETY	50	85	52	41
COMBINED
COMBINED	39	90	37	14

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of Digi International the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Digi International shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Digi International. Price-to-Profit (also referred to as price-earnings, P/E) is 55 which means that the stock price compared with what market professionals expect for future profits is lower than for 55% of comparable companies, indicating a good value concerning Digi International's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 64, which means that the stock price is lower as regards to invested capital than for 64% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 81% of alternatives (only 19% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Digi International's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	38	38	30	19
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	45	70	62	55
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	63	66	64	64
DIVIDEND YIELD
DIVIDEND YIELD	1	1	1	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	31	45	37	23

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Digi International; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Digi International shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Digi International. Capital Growth has a rank of 89, which means that currently professionals expect the company to grow its invested capital more than 42% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 59 (above 59% of alternative investments). But Sales Growth has only a rank of 20, which means that, currently, professionals expect the company to grow less than 80% of its competitors, and Profit Growth is also low at a rank of 42. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Digi International, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	47	55	61	20
PROFIT GROWTH
PROFIT GROWTH	21	92	45	42
CAPITAL GROWTH
CAPITAL GROWTH	n/a	97	46	89
STOCK RETURNS
STOCK RETURNS	82	67	27	59
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	71	95	43	53

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Digi International.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company Digi International has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Digi International is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Digi International. Leverage is at a rank of 53, meaning the company has a below-average debt-to-equity ratio. It has less debt than 53% of its competitors. Liquidity is also good at a rank of 59, meaning the company generates more profit to service its debt than 59% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 32, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 68% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), Digi International has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Digi International. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with Digi International and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	69	62	49	53
REFINANCING
REFINANCING	35	59	30	32
LIQUIDITY
LIQUIDITY	55	72	58	59
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	50	85	52	41

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Digi International and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	91	87	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	80	78	^new
MARKET PULSE
MARKET PULSE	n/a	72	67	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	94	92	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Digi International.
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