Digi International Inc (NASDAQ: DGII)

Sector: Technology Industry: Communication Equipment CIK: 0000854775
Market Cap 1.61 Bn
P/B 2.52
P/E 39.35
P/S 3.73
ROIC (Qtr) 6.06
Div Yield % 0.00
Rev 1y % (Qtr) 8.84
Total Debt (Qtr) 171.18 Mn
Debt/Equity (Qtr) 0.27

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 107.96M provides robust 0.63x coverage of total debt 171.18M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 21.90M provide 6.52x coverage of short-term debt 3.36M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 107.96M provides exceptional 17.08x coverage of interest expenses 6.32M, showing strong debt service capability.
  • Robust free cash flow of 105.33M exceeds capital expenditure of 2.63M by 40.05x, indicating strong organic growth funding capability.
  • Retained earnings of 288.15M provide full 1.72x coverage of long-term debt 167.82M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 107.96M barely covers its investment activities of (148.33M), with a coverage ratio of -0.73, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (148.33M) provide weak support for R&D spending of 63.66M, which is -2.33x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 21.90M provide limited coverage of acquisition spending of (145.70M), which is -0.15x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 56.24M show weak coverage of depreciation charges of 34.24M, with a 1.64 ratio indicating high capital intensity and potential reinvestment needs.
  • Retained earnings of 288.15M provide limited buffer against comprehensive income items of (23.79M), which is -12.11x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.78 2.22
EV to Cash from Ops. EV/CFO 15.17 10.78
EV to Debt EV to Debt 9.57 25.00
EV to EBIT EV/EBIT 29.13 32.18
EV to EBITDA EV/EBITDA 18.10 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 15.55 -3.32
EV to Market Cap EV to Market Cap 1.02 1.17
EV to Revenue EV/Rev 3.81 27.87
Price to Book Value [P/B] P/B 2.52 5.35
Price to Earnings [P/E] P/E 39.35 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -25.01
Dividend per Basic Share Div per Share (Qtr) 0.00 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.46
Interest Coverage Int. cover (Qtr) 8.90 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.15 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -20.39 463.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 21.99 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 10.87 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 46.93 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 118.38 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 77.42 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 30.25 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.31 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.20 1.20
Current Ratio Curr Ratio (Qtr) 1.21 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.27 0.43
Interest Cover Ratio Int Coverage (Qtr) 8.90 -12.93
Times Interest Earned Times Interest Earned (Qtr) 8.90 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 21.00 -40.66
EBIT Margin % EBIT Margin % (Qtr) 13.07 -52.32
EBT Margin % EBT Margin % (Qtr) 11.60 -59.46
Gross Margin % Gross Margin % (Qtr) 62.90 39.35
Net Profit Margin % Net Margin % (Qtr) 9.50 -60.72