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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#234
Positioning
Market Dominance
Manufacturing
Computer Hardware
$1.4B
Ronald E. Konezny
Digi International Inc. provides business and mission-critical Internet of Things 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, cellular modules to embed cellular communications abilities into products to deploy and manage intelligent and secure cellular connected products.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = DGII ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UL UNILEVER PLC | 78 | 96 | 98 | 59 | - | - | 28.5% | 8.0% | 100.0% | 100.0% | 10.4% | -4.6% | 3.3% | 0.0x | $141.8B | VS | |
$ASML ASML HOLDING NV | 77 | 89 | 86 | 83 | - | - | 46.1% | 16.6% | 51.3% | 31.9% | 26.8% | -4.0% | 1.0% | 25.0x | $272.1B | VS | |
$ESLT ELBIT SYSTEMS LTD | 76 | 81 | 87 | 85 | - | - | 10.3% | 3.1% | 24.1% | 7.2% | 4.7% | 14.3% | 0.8% | 25.0x | $11.4B | VS | |
$MT ArcelorMittal | 75 | 71 | 98 | 85 | - | - | 2.2% | 1.5% | 9.3% | 5.3% | 2.2% | -8.5% | 2.2% | 16.0x | $18.9B | VS | |
$AMAT APPLIED MATERIALS INC /DE | 75 | 85 | 87 | 84 | 20.9x | 13.6x | 35.5% | 19.8% | 48.7% | 29.2% | 24.7% | 4.4% | 0.8% | 32.0x | $181.9B | VS | |
$SIMO Silicon Motion Technology CORP | 75 | 84 | 86 | 85 | - | - | 11.8% | 8.8% | 45.9% | 11.3% | 11.1% | 25.7% | 3.7% | 0.0x | $1.8B | VS | |
$CODA Coda Octopus Group, Inc. | 74 | 83 | 90 | 79 | 16.3x | 11.9x | 7.6% | 7.0% | 66.5% | 17.1% | 15.6% | 39.0% | 0.0% | 0.0x | $115M | VS | |
$GSK GSK plc | 74 | 84 | 90 | 70 | - | - | 22.6% | 4.9% | 71.2% | 12.8% | 9.4% | 1.7% | 5.9% | 124.0x | $72.1B | VS | |
$EFXT Enerflex Ltd. | 74 | 80 | 91 | 83 | - | - | 3.0% | 1.1% | 20.9% | 7.3% | 1.3% | 3.0% | 0.9% | 67.0x | $1.2B | VS | |
$BUD Anheuser-Busch InBev SA/NV | 74 | 84 | 97 | 63 | - | - | 8.2% | 3.5% | 55.3% | 25.9% | 12.4% | 0.7% | 1.7% | 0.0x | $87.0B | VS | |
$DGII DIGI INTERNATIONAL INC | 66 | 77 | 77 | 68 | 44.4x | 34.7x | 6.6% | 4.6% | 62.5% | 13.3% | 9.7% | 16.4% | 0.0% | 21.0x | $1.4B | ||
| SECTOR BENCH | - | - | - | - | - | 22.3x | 11.5x | -2.5% | -0.1% | 42.5% | 1.3% | -0.2% | 5.9% | 0.0% | 0.2x | - | REF |
DIGI INTERNATIONAL INC (DGII) receives a "Buy" rating with a composite score of 66.1/100. It ranks #234 out of 7,333 stocks in our coverage universe and carries a 4-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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YOY expansion rate
Core pricing power
Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Ronald E. Konezny
Chief Executive Officer
Labor Force
790
77
36
69
Audit Verdict: Average governance indicators based on financial metrics.
No recent insider transactions available for DGII
Headcount
790
HQ Base
MINNETONKA, Minnesota
Outperforming peers — winners tend to keep winning over 3-12 months
Trading at a discount to fundamentals — favorable entry valuation
High profitability & efficiency — strong quality floor supports entry
Low volatility — smoother ride and historically better risk-adjusted returns
Moderate investment profile
Top-rated overall — multiple factors aligned for strong entry
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Relative valuation derived from Manufacturing sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for DGII.
View All RatingsMaterial decline in asset turnover efficiency detected
High margin volatility — erratic forensic earnings quality
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 77 | 85 | -8DRAG |
| MOMENTUM | 68 | 67 | +1NEUTRAL |
| VALUATION | 77 | 77 | 0NEUTRAL |
| INVESTMENT | 36 | 62 | -26DRAG |
| STABILITY | 69 | 64 | +5NEUTRAL |
| SHORT INT | 36 | 26 | +10ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 6.6% (sector -2.5%)
GM 63% vs sector 43%, OM 13% vs sector 1%
Capital turnover N/A
Rev growth 16%, 11yr history
Interest coverage N/A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
DIGI INTERNATIONAL INC receives a Buy rating with a composite score of 66.1/100 and 4 out of 5 stars, ranking #234 of 7,333 stocks in our universe. DGII displays a favorable combination of factors that positions it above the majority of the market. While not without risk, the quantitative profile supports a constructive outlook.
DGII earns a quality score of 77/100, indicating above-average business quality. The company reports a return on equity of 6.6% (sector avg: -2.5%), gross margins of 62.5% (sector avg: 42.5%), net margins of 9.7% (sector avg: -0.2%). Companies in this tier generally demonstrate consistent profitability and efficient capital deployment, though they may face some competitive pressure.
DGII carries a solid value score of 77/100, pointing to an attractively priced stock relative to peers. Key valuation metrics include a P/E ratio of 44.39x, an EV/EBITDA of 34.68x, a P/B ratio of 2.91x. This score suggests reasonable compensation for the risks involved, with potential upside if the market recognizes the stock's underlying worth.
DIGI INTERNATIONAL INC's investment score of 36/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 16.4% vs. a sector average of 5.9% and a return on assets of 4.6% (sector: -0.1%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
DGII demonstrates moderate momentum with a score of 68/100, suggesting a neutral price trend without strong directional conviction. Revenue growth stands at 16.4% year-over-year, while a beta of 1.26 reflects its sensitivity to broader market moves. Moderate momentum may indicate the stock is consolidating or transitioning between trends, warranting close monitoring of upcoming catalysts.
DGII shows good financial stability with a score of 69/100. Key stability metrics include a beta of 1.26 and a debt-to-equity ratio of 21.00x (sector avg: 0.2x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
DIGI INTERNATIONAL INC's short interest score of 36/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include above-average market sensitivity (beta: 1.26), elevated leverage (D/E: 21.00x), small-cap liquidity risk. At $1.4B (small-cap), DGII carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
DIGI INTERNATIONAL INC is a small-cap company in the Manufacturing sector, ranked #0 of 50 in its sector (100th percentile) and #234 of 7,333 overall (97th percentile). Key comparisons include ROE of 6.6% exceeding the -2.5% sector median and operating margins of 13.3% above the 1.3% sector average. This top-quartile standing reflects exceptional competitive strength relative to Manufacturing peers.
Quant Factor Profile
Key factor gap
Value (77) vs Investment (36) — closing this gap could shift the rating.
EV/EBITDA 203% ABOVE SECTOR MEDIAN
ROE 364% BELOW SECTOR MEDIAN
Gross Margin 47% ABOVE SECTOR MEDIAN (FAVORABLE)
AUDIT DATA AS OF DEC 31, 2025 (Q3 FY2025)
We rate DIGI INTERNATIONAL INC (DGII) as a Buy with a composite score of 66.1/100 at a current price of $48.60. The stock scores above average across the majority of our six quantitative factors and ranks #234 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.
The rating is primarily driven by strength in quality (77th percentile) and value (77th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (36th percentile) and momentum (68th percentile) tempers our overall conviction. We assign a Narrow Moat rating (46/100), Medium uncertainty, and Standard capital allocation.
Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.
DIGI INTERNATIONAL INC holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 66.1/100 places it at rank #234 in our full 7,333-stock universe. At $1.4B in market capitalization, DIGI INTERNATIONAL INC is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.
The near-term outlook is constructive, with revenue growing at 16% and momentum in the 68th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 36th percentile indicates reinvestment patterns that investors should monitor for sustainability.
The margin cascade tells an important story: gross margins of 63% (+20.0pp vs sector) narrow to operating margins of 13% (+12.0pp vs sector) and net margins of 9.7%, yielding a gross-to-net conversion rate of 16%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.
At a current price of $48.60, DIGI INTERNATIONAL INC appears undervalued relative to its fundamentals. Our value factor score of 77/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.
The stock currently trades at a P/E of 44.4x (a 100% premium to the sector median of 22.3x), EV/EBITDA of 34.7x (at a premium), P/B of 2.9x, P/S of 4.3x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.
The stock's Buy rating (composite score 66.1/100) reflects broad-based quantitative strength, placing it in the top 20% of our 7,333-stock universe.
Gross margins of 63% signal strong pricing power and brand/IP advantages — businesses with margins above 40% have historically demonstrated more resilient earnings through economic cycles.
Revenue growth of 16% confirms the business is expanding its addressable market — growth at this level typically supports multiple expansion and attracts institutional capital.
A value factor score of 77/100 suggests the market is underpricing these fundamentals, creating a potential margin of safety for new investors.
A conservative balance sheet (21% D/E) provides financial flexibility for acquisitions, buybacks, or weathering economic downturns without dilution.
We assign a Medium uncertainty rating to DIGI INTERNATIONAL INC. The stock presents a balanced risk profile: elevated valuation multiple (P/E 44.4x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.
Specific risk factors that inform our assessment include: elevated valuation multiple (P/E 44.4x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 69th percentile and quality factor at the 77th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: healthy gross margins of 63% provide a buffer against cost pressures; conservative leverage (21% D/E) limits balance sheet risk; above-average stability (69th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.
We rate DIGI INTERNATIONAL INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 6.6%, and the balance sheet is managed within acceptable parameters (D/E: 21%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; DIGI INTERNATIONAL INC falls short on at least one dimension.
There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.
In summary, DIGI INTERNATIONAL INC receives a Buy rating with a composite score of 66.1/100 (rank #234 of 7,333). Our quantitative framework assigns a Narrow Moat (46/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 66/100.
Our analysis supports a constructive view on DIGI INTERNATIONAL INC. The combination of identifiable competitive advantages, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We assign DIGI INTERNATIONAL INC a Narrow Moat rating with a composite moat score of 46/100. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that DIGI INTERNATIONAL INC can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being margin superiority at 17.5/20.
The strongest moat sources are margin superiority (17.5/20) and growth durability (15.1/20). GM 63% vs sector 43%, OM 13% vs sector 1%. Rev growth 16%, 11yr history. These pillars form the core of DIGI INTERNATIONAL INC's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (0/20) and economic value creation (4.9/20). Capital turnover N/A. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect DIGI INTERNATIONAL INC's moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers include gross margins of 63% providing a solid profitability foundation, operating margins of 13% reflecting effective cost management, robust top-line growth of 16% expanding the revenue base. The margin cascade from 63% gross to 13% operating to 9.7% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that the profit engine is high-quality and likely sustainable, with the quality factor at the 77th percentile.
The margin profile shows gross margins of 63%, operating margins of 13%, net margins of 9.7%. Return metrics include ROE of 6.6% and ROA of 4.6%. Relative to the Manufacturing sector, gross margins are 20.0 percentage points above the sector median of 43%, and ROE of 6.6% compares to a sector median of -2.5%.
The balance sheet reflects a conservatively managed balance sheet with D/E of 21%, revenue growth of 16%. The sector median D/E is 0%, putting DIGI INTERNATIONAL INC at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.
A P/E of 44.4x leaves little room for execution misses — any earnings disappointment could trigger a sharp multiple compression.
Above 50MA
37.18%
Net New Highs
+51081
Digi International has acquired Particle Industries, a provider of edge-to-cloud application infrastructure for intelligent devices, for $50 million. This acquisition is expected to significantly accelerate Digi's Annual Recurring Revenue (ARR) growth, particularly within its IoT Products and Services segment, by integrating Particle's subscription-based model. The synergy aims to strengthen Digi's "embedded-as-a-service" offering, enabling customers to deploy and manage connected products more efficiently with enhanced edge AI and connectivity solutions.
Digi International Inc. (NASDAQ:DGII) has received an average "Hold" rating from seven brokerages, with a consensus 12-month price target of $49.80. The company recently surpassed quarterly earnings expectations, reporting $0.56 EPS against estimates of $0.55, and revenue of $122.46 million, up 17.9% year-over-year. Insider selling has occurred, with key executives divesting shares, while institutional investors have adjusted their positions in the stock.
David Sampsell, VP at Digi International (NASDAQ: DGII), exercised options for 324 shares, valued at $8,061, as disclosed in an SEC filing on February 11. The company demonstrates strong financial health with a 17.9% revenue growth, a 62.38% gross margin, and a low debt-to-equity ratio of 0.23. Despite some challenges in EPS and market capitalization compared to peers, its P/E, P/S, and EV/EBITDA ratios suggest potential undervaluation.
Digi International (NASDAQ:DGII) VP David Sampsell sold 5,000 shares of the company's stock for $228,700, reducing his stake by 16.81% to 24,740 shares. The sale occurred on February 10th at an average price of $45.74 per share. This followed Digi International's strong quarterly earnings report where they beat revenue and EPS estimates and provided positive guidance for Q2 2026.
Digi International (DGII) reported Q1 2026 revenues of US$122.5 million and basic EPS of US$0.31, marking an increase from the previous year. The company's net profit margin improved to 9.5% from 8.4%, supporting a bullish outlook on profitability despite revenue growth trailing the broader US market. Although its P/E ratio is higher than industry averages, a discounted cash flow (DCF) analysis suggests a significant discount to its fair value.