DGII gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 48 industry peers in the Communications Equipment industry. While DGII belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. DGII has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year DGII was profitable.
In the past year DGII had a positive cash flow from operations.
DGII had positive earnings in each of the past 5 years.
DGII had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

DGII's Return On Assets of 4.42% is fine compared to the rest of the industry. DGII outperforms 77.08% of its industry peers.
DGII has a better Return On Equity (6.41%) than 72.92% of its industry peers.
DGII's Return On Invested Capital of 6.22% is fine compared to the rest of the industry. DGII outperforms 70.83% of its industry peers.
The Average Return On Invested Capital over the past 3 years for DGII is significantly below the industry average of 12.17%.
The last Return On Invested Capital (6.22%) for DGII is above the 3 year average (6.07%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	4.42%
ROE	6.41%
ROIC	6.22%

ROA(3y)3.38%

ROA(5y)2.82%

ROE(3y)4.96%

ROE(5y)4.19%

ROIC(3y)6.07%

ROIC(5y)4.93%

1.3 Margins

Looking at the Profit Margin, with a value of 9.48%, DGII is in the better half of the industry, outperforming 79.17% of the companies in the same industry.
In the last couple of years the Profit Margin of DGII has grown nicely.
Looking at the Operating Margin, with a value of 13.08%, DGII belongs to the top of the industry, outperforming 81.25% of the companies in the same industry.
In the last couple of years the Operating Margin of DGII has grown nicely.
DGII has a better Gross Margin (62.92%) than 81.25% of its industry peers.
In the last couple of years the Gross Margin of DGII has grown nicely.

		Industry Rank	Sector Rank
OM	13.08%
PM (TTM)	9.48%
GM	62.92%

OM growth 3Y9.68%

OM growth 5Y26.24%

PM growth 3Y23.81%

PM growth 5Y25.82%

GM growth 3Y4.13%

GM growth 5Y4.06%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so DGII is destroying value.
DGII has more shares outstanding than it did 1 year ago.
The number of shares outstanding for DGII has been increased compared to 5 years ago.
Compared to 1 year ago, DGII has a worse debt to assets ratio.

2.2 Solvency

DGII has an Altman-Z score of 4.53. This indicates that DGII is financially healthy and has little risk of bankruptcy at the moment.
DGII has a better Altman-Z score (4.53) than 75.00% of its industry peers.
DGII has a debt to FCF ratio of 1.51. This is a very positive value and a sign of high solvency as it would only need 1.51 years to pay back of all of its debts.
DGII has a Debt to FCF ratio of 1.51. This is in the better half of the industry: DGII outperforms 70.83% of its industry peers.
A Debt/Equity ratio of 0.25 indicates that DGII is not too dependend on debt financing.
DGII has a Debt to Equity ratio of 0.25. This is comparable to the rest of the industry: DGII outperforms 41.67% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.25
Debt/FCF	1.51
Altman-Z	4.53

ROIC/WACC0.63

WACC9.86%

2.3 Liquidity

DGII has a Current Ratio of 1.21. This is a normal value and indicates that DGII is financially healthy and should not expect problems in meeting its short term obligations.
DGII has a worse Current ratio (1.21) than 85.42% of its industry peers.
DGII has a Quick Ratio of 1.21. This is a bad value and indicates that DGII is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of DGII (0.85) is worse than 85.42% of its industry peers.
DGII does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1.21
Quick Ratio	0.85

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 5.53% over the past year.
The Earnings Per Share has been growing by 48.58% on average over the past years. This is a very strong growth
DGII shows a small growth in Revenue. In the last year, the Revenue has grown by 1.46%.
DGII shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.02% yearly.

EPS 1Y (TTM)5.53%

EPS 3Y7.94%

EPS 5Y48.58%

EPS Q2Q%7.69%

Revenue 1Y (TTM)1.46%

Revenue growth 3Y3.49%

Revenue growth 5Y9.02%

Sales Q2Q%8.84%

3.2 Future

DGII is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.19% yearly.
The Revenue is expected to grow by 8.07% on average over the next years. This is quite good.

EPS Next Y15.76%

EPS Next 2Y12.21%

EPS Next 3Y11.19%

EPS Next 5YN/A

Revenue Next Year11.7%

Revenue Next 2Y8.54%

Revenue Next 3Y8.07%

Revenue Next 5YN/A

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 21.38, DGII is valued on the expensive side.
Based on the Price/Earnings ratio, DGII is valued a bit cheaper than the industry average as 70.83% of the companies are valued more expensively.
DGII's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.60.
With a Price/Forward Earnings ratio of 18.47, DGII is valued on the expensive side.
Based on the Price/Forward Earnings ratio, DGII is valued a bit cheaper than the industry average as 72.92% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 25.83. DGII is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	21.38
Fwd PE	18.47

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, DGII is valued a bit cheaper than 64.58% of the companies in the same industry.
81.25% of the companies in the same industry are more expensive than DGII, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	15.87
EV/EBITDA	19.44

4.3 Compensation for Growth

DGII's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
DGII has an outstanding profitability rating, which may justify a higher PE ratio.