Digi International Inc (DGII, Financial) has recently caught the attention of investors with its notable stock performance. Over the past week, the company's stock price has seen an 8.37% gain, and looking at a broader timeframe, it has surged by 18.46% over the past three months. With a current market capitalization of $1 billion and a stock price of $27.72, Digi International is making waves in the hardware industry. According to GuruFocus's valuation metrics, the stock is currently fairly valued, with a GF Value of $29, slightly up from the past GF Value of $28.69. This marks a shift from the previous modestly undervalued status, indicating a positive investor sentiment and a potential alignment with the company's intrinsic value.
Introduction to Digi International Inc
Digi International Inc, a Minnesota-based corporation, is a key player in the Internet of Things (IoT) connectivity products and services sector. The company operates through two segments: IoT Products and Services, which includes a variety of communications products and development services, and IoT Solutions, which provides wireless monitoring and task management services. Digi International's primary market is the United States, but it also has a significant presence in Europe, the Middle East, Africa, and other regions. The majority of its revenue is generated from the IoT Products & Services segment, showcasing its strength in this innovative and expanding field.
Assessing Digi International's Profitability
When it comes to profitability, Digi International Inc boasts a Profitability Rank of 7 out of 10, indicating a strong ability to generate profits relative to its peers. The company's Operating Margin stands at 11.26%, outperforming 79.46% of its industry counterparts. Additionally, Digi International's Return on Equity (ROE) is 4.76%, surpassing half of the companies in the industry. Its Return on Assets (ROA) and Return on Invested Capital (ROIC) are also commendable at 2.93% and 6.30%, respectively, indicating efficient use of assets and capital. Notably, Digi International has maintained profitability for the past 10 years, a testament to its consistent performance and business resilience.
Growth Trajectory of Digi International
Digi International's growth prospects are impressive, as reflected by its Growth Rank of 9 out of 10. The company's 3-Year Revenue Growth Rate per Share is 8.50%, which is better than 61.25% of its industry peers. Over a 5-year period, the Revenue Growth Rate per Share is 7.40%, outpacing 66.17% of competitors. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at 6.94%, which is more optimistic than 64.17% of the industry. The 3-Year EPS without NRI Growth Rate stands at an impressive 26.60%, and the 5-Year EPS without NRI Growth Rate is an outstanding 76.00%, both indicating robust earnings growth and potential for future profitability.
Notable Shareholders in Digi International
Several prominent investors have taken significant positions in Digi International. Mairs and Power (Trades, Portfolio) holds 1,012,214 shares, representing a 2.81% share percentage. Chuck Royce (Trades, Portfolio) owns 913,973 shares, accounting for 2.54% of the company's shares. First Eagle Investment (Trades, Portfolio) has a stake of 181,894 shares, which translates to a 0.51% share percentage. These holdings reflect the confidence of seasoned investors in the company's prospects and management.
Competitive Landscape
Digi International operates in a competitive hardware industry, with key players such as Infinera Corp (INFN, Financial) with a market cap of $1.16 billion, Harmonic Inc (HLIT, Financial) valued at $1.41 billion, and Applied Optoelectronics Inc (AAOI, Financial) with a market cap of $625.432 million. These companies, with market capitalizations close to that of Digi International, serve as benchmarks for performance and market positioning within the sector.
Conclusion: Digi International's Market Position
In conclusion, Digi International Inc's recent stock performance, solid profitability, and impressive growth trajectory underscore its competitive position in the hardware industry. The company's ability to maintain profitability over the past decade, combined with its strong growth rates and the confidence of notable investors, positions it well for future success. As the IoT landscape continues to evolve, Digi International's focus on connectivity products and services is likely to drive further growth and investor interest.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
