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 correct valuation and a medium growth rate.

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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.
DGII had a positive operating cash flow in the past year.
In the past 5 years DGII has always been profitable.
In the past 5 years DGII always reported a positive cash flow from operatings.

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.
With a decent Return On Invested Capital value of 6.22%, DGII is doing good in the industry, outperforming 70.83% of the companies in the same industry.
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

With a decent Profit Margin value of 9.48%, DGII is doing good in 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.
DGII has a better Operating Margin (13.08%) than 81.25% of its industry peers.
DGII's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 62.92%, DGII belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.
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.
The debt/assets ratio for DGII is higher compared to a year ago.

2.2 Solvency

DGII has an Altman-Z score of 4.49. This indicates that DGII is financially healthy and has little risk of bankruptcy at the moment.
DGII has a better Altman-Z score (4.49) 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.
Looking at the Debt to FCF ratio, with a value of 1.51, DGII is in the better half of the industry, outperforming 70.83% of the companies in the same industry.
A Debt/Equity ratio of 0.25 indicates that DGII is not too dependend on debt financing.
DGII has a Debt to Equity ratio (0.25) which is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0.25
Debt/FCF	1.51
Altman-Z	4.49

ROIC/WACC0.63

WACC9.88%

2.3 Liquidity

A Current Ratio of 1.21 indicates that DGII should not have too much problems paying its short term obligations.
With a Current ratio value of 1.21, DGII is not doing good in the industry: 85.42% of the companies in the same industry are doing better.
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.
DGII has a worse Quick ratio (0.85) than 85.42% of its industry peers.
The current and quick ratio evaluation for DGII is rather negative, while it does have 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

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

The Earnings Per Share is expected to grow by 11.19% on average over the next years. This is quite good.
Based on estimates for the next years, DGII will show a quite strong growth in Revenue. The Revenue will grow by 8.07% on average per year.

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

DGII is valuated rather expensively with a Price/Earnings ratio of 20.51.
70.83% of the companies in the same industry are more expensive than DGII, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 28.32, DGII is valued a bit cheaper.
A Price/Forward Earnings ratio of 17.72 indicates a rather expensive valuation of DGII.
DGII's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. DGII is cheaper than 72.92% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.57. DGII is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	20.51
Fwd PE	17.72

4.2 Price Multiples

DGII's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. DGII is cheaper than 64.58% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, DGII is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	15.22
EV/EBITDA	19.23

4.3 Compensation for Growth

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