We assign a fundamental rating of 6 out of 10 to DGII. DGII was compared to 48 industry peers in the Communications Equipment industry. DGII scores excellent on profitability, but there are some minor concerns on its financial health. DGII is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

DGII had positive earnings in the past year.
In the past year DGII had a positive cash flow from operations.
DGII had positive earnings in each of the past 5 years.
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 75.51% of its industry peers.
With a decent Return On Equity value of 6.41%, DGII is doing good in the industry, outperforming 73.47% of the companies in the same industry.
The Return On Invested Capital of DGII (6.22%) is better than 69.39% of its industry peers.
The Average Return On Invested Capital over the past 3 years for DGII is significantly below the industry average of 12.15%.
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

The Profit Margin of DGII (9.48%) is better than 77.55% of its industry peers.
DGII's Profit Margin has improved in the last couple of years.
DGII has a Operating Margin of 13.08%. This is amongst the best in the industry. DGII outperforms 81.63% of its industry peers.
In the last couple of years the Operating Margin of DGII has grown nicely.
DGII has a Gross Margin of 62.92%. This is amongst the best in the industry. DGII outperforms 81.63% 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

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

2.2 Solvency

DGII has an Altman-Z score of 4.44. This indicates that DGII is financially healthy and has little risk of bankruptcy at the moment.
DGII's Altman-Z score of 4.44 is fine compared to the rest of the industry. DGII outperforms 77.55% of its industry peers.
The Debt to FCF ratio of DGII is 1.51, which is an excellent value as it means it would take DGII, only 1.51 years of fcf income to pay off all of its debts.
DGII's Debt to FCF ratio of 1.51 is fine compared to the rest of the industry. DGII outperforms 71.43% 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 42.86% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.25
Debt/FCF	1.51
Altman-Z	4.44

ROIC/WACC0.66

WACC9.5%

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: 83.67% of the companies in the same industry are doing better.
A Quick Ratio of 0.85 indicates that DGII may have some problems paying its short term obligations.
With a Quick ratio value of 0.85, DGII is not doing good in the industry: 85.71% of the companies in the same industry are doing better.
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.
Measured over the past years, DGII shows a very strong growth in Earnings Per Share. The EPS has been growing by 48.58% on average per year.
Looking at the last year, DGII shows a small growth in Revenue. The Revenue has grown by 1.46% in the last year.
Measured over the past years, DGII shows a quite strong growth in Revenue. The Revenue has been growing by 9.02% on average per year.

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.
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

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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 20.16, DGII is valued on the expensive side.
Based on the Price/Earnings ratio, DGII is valued a bit cheaper than 69.39% of the companies in the same industry.
DGII is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 17.42, DGII is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of DGII indicates a somewhat cheap valuation: DGII is cheaper than 73.47% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.98. DGII is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	20.16
Fwd PE	17.42

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, DGII is valued a bit cheaper than the industry average as 65.31% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DGII indicates a rather cheap valuation: DGII is cheaper than 81.63% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	14.97
EV/EBITDA	18.93

4.3 Compensation for Growth

The 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.