Digi International Inc. Common Stock (DGII)

FairStock Score: 44/100 — MIXED

Key Financials

Strengths

• Generates $117 million in annual free cash flow (5.5% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Conservative balance sheet with debt-to-equity of just 0.23, providing financial flexibility
• Altman Z-Score of 5.4 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 17.9% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($21) with negative 169% margin of safety—limited downside protection

AI Analysis

Digi International Inc. Common Stock is a small-cap technology company valued at $2.1 billion. The business generates $449 million in annual revenue with a 2.6% net margin and $117 million in free cash flow. From a quality standpoint, Digi shows solid Piotroski F-Score of 7/9 and Altman Z-Score of 5.4 confirms fortress-level solvency. On valuation, the stock is commanding a steep 50.2x multiple, with trades far above its Graham Number ($21) with no margin of safety. Growth dynamics show revenue growing at 17.9% and profit growth of 16.1%. Our composite FairStock Score of 44/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Digi's 18% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $117 million in annual free cash flow (5.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 50x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer