Quality Investor

Digi International Inc.

Rank #232ValueWatchlistCompare with other stocks

DGII · Nasdaq · Technology

Digi International Inc. (DGII) — Rank #232 by gross profitability (GP/assets 0.28) · ROE 6.0% · Piotroski F-Score 5 / 9.

As-of 2026-10-30 · CIK 0000854775 · all metrics point-in-time as of the filing date.

About

Digi International Inc. provides business and mission-critical Internet of Things (IoT) connectivity products, services, and solutions in the United States, Europe, the Middle East, Africa, and internationally.

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It operates through IoT Products & Services, and IoT Solutions segments. The company offers cellular routers for mission-critical wireless connectivity; cellular modules to embed cellular communications abilities into the products to deploy and manage intelligent and secure cellular connected products; console servers to provide secure and remote access to network equipment in data centers and at edge locations; and radio frequency products, including embedded wireless modules, off-the-shelf gateways, modems, and adapters under the Digi XBee brand. It also provides embedded system products under the Digi Connect, and ConnectCore brands; and infrastructure management products comprising serial servers, which offers serial port-to-Ethernet integration of devices into wired Ethernet networks; and universal serial bus solutions. In addition, it provides Digi Remote Manager and Lighthouse, a recurring revenue cloud-based service that offers a secure environment for customers to manage connected device deployment and network devices; SmartSense by Digi for monitoring wirelessly the temperature of food and other perishable or sensitive goods, monitoring facilities or pharmacies by tracking the completion of operating tasks by employees, and quality control and incident management in food service, healthcare, and transportation/logistics industries; and Ventus for MNaaS solutions. Further, the company provides professional services, such as site planning, implementation management, application development, and customer training; data plan subscriptions; and enhanced technical support services, as well as Digi Wireless Design Services. Digi International Inc.

was incorporated in 1985 and is headquartered in Hopkins, Minnesota.

Industry
Communication Equipment
Sector
Technology
State
DE
Filer Category
Large accelerated filer
Fiscal Year End
September 30
Website
digi.com

Company Snapshot

P/E and dividend yield are the primary valuation lenses for mature businesses.

Market Cap

—

P/E (annual)

—

P/S (annual)

—

P/B

—

P/OCF (annual)

—

Shareholder Yield

—

Employees

913

Industry

Communication Equipment

Exchange

Nasdaq

11/12

Flags passed

DGII passes 11/12 quality flags

1 caution to review

  • CAUTION
    Dilution above 2%

    Annual share count increase exceeds 2%. May be acceptable for high-growth companies funding talent via stock compensation

  • PASS
    Gross margin holding
  • PASS
    FCF not negative from investment
  • PASS
    Disclosure consistent
  • PASS
    Revenue not declining
  • PASS
    Operating margin holding
  • PASS
    Free cash flow intact
  • PASS
    Passes safety gate
  • PASS
    Balance sheet stable
  • PASS
    No competitive retreat
  • PASS
    SBC not compressing margin
  • PASS
    No valuation convergence

Strengths Revenue growth accelerating · Operating leverage expanding · Deferred revenue growing · RPO outpacing revenue · Sequential beat (rev + EPS)

A count of the 12 warning flags that could be evaluated. Unweighted: colour follows the worst flag.

Quality Profile

Profitability

1/1 pass
GP / assets
0.28
Return on equity
6.0%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.41
Current ratio
1.13×
Net cash
-$80.16M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
3.6%

Growth

1/2 pass
Revenue growth
1.5%
Piotroski F-Score
5 / 9
Share dilution
2.0%

Dividend yield and payout ratio are the primary reads at this stage (trailing P/E — see valuation above).

Profitability

Does it make money well?

No warning flags · GP/assets 64th percentile of 26 SIC 35 peers

Gross profitability (GP / assets)

0.28

Primary signal (Novy-Marx).

64th pctl of 26 SIC 35 peers

Return on equity

6.0%

Gross margin

62.9%

88th pctl of 26 SIC 35 peers

Revenue growth (YoY)

1.5%

RPO growth (YoY)

34.8%

Remaining performance obligations growth — RPO > revenue = forward demand building.

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

3.5%

Revenue CAGR (5Y)

9.0%

Earnings CAGR (3Y)

28.2%

FCF CAGR (3Y)

43.3%

Cash Flow Health

Is the cash real?

No warning flags · FCF 158% above net income

Free cash flow

$105.33M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF vs net income

158.1%

(FCF − net income) ÷ |net income|. Positive: cash above earnings. Negative: below.

FCF not below net income

Fails when free cash flow is below net income (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

3.6%

Stock-based comp intensity.

Balance Sheet Strength

Can it survive a storm?

Caution: Dilution above 2% · net debt $80.16M, F-Score 5/9

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.41

92nd pctl of 26 SIC 35 peers (best = lowest)

Current ratio

1.13×

0th pctl of 26 SIC 35 peers

Quick ratio

0.71×

Net cash

-$80.16M

Cash & equivalents minus total debt.

Piotroski F-Score

5 / 9

Fundamental-strength score (0-9).

Valuation

Is the price reasonable?

No warning flags

Capital allocation quality

Composite score

2.3 / 5

Fair
Share count trend
2.0%2/5 Fair
Buyback timing
N/AN/A
Dividend growth consistency(non-payer or broken streak)
0 yr3/5 Good
Net debt trajectory
-4.5%2/5 Fair

Lifecycle Phase History

20202025
Value
Op. Leverage
Hypergrowth

Price History

DGII+228.6% · +26.8% CAGRSPY+82.9% · +12.8% CAGR