Stock Analysis · Digi International Inc (DGII)
Overview
Digi International is a connectivity company focused on helping businesses link physical equipment to digital networks. In simple terms, it sells the hardware, software, and services that let machines, sensors, vehicles, industrial systems, and remote sites communicate securely. Its products are used in areas such as industrial automation, transportation, energy, medical devices, smart cities, and enterprise networking.
The business is organized around two main segments. Based on the latest annual filing and recent quarterly disclosures, revenue is primarily generated from:
- IoT Products & Services: about 84% of revenue. This includes cellular routers, embedded modules, console servers, infrastructure management devices, and recurring software and support tied to connected-device deployments.
- IoT Solutions: about 16% of revenue. This segment includes more packaged, application-oriented solutions, especially for smart utilities, monitoring, and managed network deployments.
Within that mix, hardware is still the largest contributor, but software, cloud management, and recurring service revenue are increasingly important because they tend to be stickier and carry stronger margins. The business model has gradually improved as Digi has expanded from pure device sales into full connectivity platforms and remote management tools.
The broader financial picture shows a company that has grown its revenue meaningfully over the last several years while also lifting gross profit faster than operating costs. Interest expense has fallen sharply from post-acquisition levels, which has helped more of the operating profit flow through to net income.
Key Figures
| Metric | Value | Sector ⓘ |
|---|---|---|
| Date | Sep 12, 2026 | |
| Context | ||
| Sector | Technology | |
| Industry | Communication Equipment | |
| Market Cap ⓘ | $2.62B | |
| Beta ⓘ | 0.97 | |
Value (Cheapness) | ||
| P/E Ratio ⓘ | 54.79 | 29.51 |
| FCF Yield ⓘ | 5.16% | 4.25% |
| EBIT / EV ⓘ | 2.34% | 2.85% |
| PEG ⓘ | 0.83 | |
Growth (Business expansion) | ||
| Revenue Growth ⓘ | 29.00% | 15.40% |
| RPS Growth (5Y CAGR) ⓘ | 5.39% | 8.56% |
| EPS Growth (5Y CAGR) ⓘ | 2.17% | -11.88% |
| Margin Growth (5Y Trend) ⓘ | 8.28% | 0.46% |
| FCF Growth (5Y CAGR) ⓘ | 17.39% | 9.80% |
Quality (Business durability) | ||
| ROIC (Latest) ⓘ | 6.23% | 9.44% |
| ROIC (5Y Median) ⓘ | 8.30% | 8.30% |
| Net Debt / EBIT (Latest) ⓘ | 2.01 | 0.54 |
| Net Debt / EBIT (5Y Median) ⓘ | 2.87 | 0.44 |
| Operating Margin (Latest) ⓘ | 12.79% | 9.58% |
| Operating Margin (5Y Median) ⓘ | 9.87% | 8.25% |
| Debt to Equity (Latest) ⓘ | 17.28% | 33.33% |
| Profit Margin (Latest) ⓘ | 9.63% | 7.14% |
| Free Cash Flow (Latest) ⓘ | $135.16M | |
Momentum (Price trend) | ||
| 3Y Return ⓘ | +122.39% | +45.48% |
| 12M Return (excl. last month) ⓘ | +148.80% | +23.48% |
| 6M Return ⓘ | +39.91% | +20.93% |
| Price vs. 200-Day MA ⓘ | +19.65% | +7.43% |
Digi sits in the mid-cap range, with stock-price behavior close to the overall market rather than extremely volatile. The table points to a mixed but interesting profile: valuation looks demanding on earnings, cash generation is solid, growth has accelerated recently, and share-price momentum has been very strong. Profitability has improved more clearly than return on invested capital, so the quality profile is not uniformly strong even though margins and cash flow are moving in the right direction.
Growth
Digi operates in a sector with durable long-term demand drivers. Businesses are connecting more equipment to networks, adding remote monitoring, strengthening cybersecurity at the edge, and looking for ways to manage distributed assets with less manual labor. That supports demand for industrial routers, embedded communication modules, device management platforms, and subscription software.
The company’s strategy is sensible for that backdrop. Rather than competing only on one-time hardware sales, Digi has been building a broader platform that combines devices, connectivity software, remote management, and specialized solutions. That can deepen customer relationships and make deployments harder to replace once installed. The installed base also creates opportunities to add software and services over time.
Recent revenue trends show a meaningful reacceleration after a softer period in 2024 and early 2025. Growth moved from declines back to positive territory and then climbed into the high-20% range by mid-2026, clearly ahead of the sector median. That matters because it suggests Digi is not only recovering from a slowdown but doing so with notable momentum.
Cash generation has also strengthened considerably. Over the past few years, free cash flow has risen from a modest level to well above $100 million on a trailing basis, indicating that earnings quality and working-capital discipline have improved alongside revenue growth. A free-cash-flow yield above the sector median adds support to the view that the business is producing meaningful cash relative to its size.
A major catalyst in the near term is the continued expansion of recurring software and infrastructure-management offerings, which can improve margins and reduce dependence on hardware cycles. Another potential growth driver is ongoing demand from industrial and transportation customers that need resilient wireless connectivity for remote operations. Digi’s acquisition-led expansion over the past several years has also given it a broader product lineup and cross-selling opportunities, and the benefit from that wider portfolio appears to be showing up more clearly now.
Risks
This article is for informational purposes only and does not constitute financial advice. Some content is AI-generated. See Disclaimer
