- If you are wondering whether Digi International's current share price lines up with its underlying worth, this piece will walk through the key valuation checks that matter most.
- The stock last closed at US$48.82, with recent returns of 8.7% over 30 days, 13.1% year to date and 59.9% over 1 year, alongside a 2.7% decline over the past week and a 174.7% return over 5 years.
- Recent news coverage has focused on Digi International's position as a provider of connectivity and IoT solutions and how that fits into broader themes in industrial and communications technology. This context helps frame how investors interpret the recent share price performance and the risks and opportunities they are weighing.
- Digi International currently scores 2 out of 6 on our valuation checks, as shown in our valuation summary. Next we will look at how different valuation approaches assess the stock and then finish with an even more complete way to think about its value.
Digi International scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Digi International Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a present value using a required rate of return.
For Digi International, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $110.9 million, and analysts have specific forecasts out to 2028, with projected free cash flow of $146.6 million in that year. Beyond that, Simply Wall St extrapolates free cash flow further by using a gradual tapering of growth to build a ten year projection path.
When all those projected cash flows are discounted back and combined, the DCF model arrives at an estimated intrinsic value of about $82.89 per share. Compared with the recent share price of $48.82, this implies the stock is about 41.1% undervalued based on this cash flow view.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Digi International is undervalued by 41.1%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.
Approach 2: Digi International Price vs Earnings
For a profitable company, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings. It links the share price directly to profit, which is ultimately what supports long term returns.
What counts as a "normal" P/E depends on how the market weighs a company’s growth outlook and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk tends to point to a lower one.
Digi International currently trades on a P/E of 43.27x. That is in line with the Communications industry average of about 43.27x, and above the peer group average of 27.56x. Simply Wall St also calculates a Fair Ratio of 26.67x, which is the P/E it would expect for Digi International after considering factors such as earnings growth, profit margins, industry, market cap and company specific risks.
This Fair Ratio is more tailored than a simple comparison with peers or the broad industry, because it adjusts for the company’s own characteristics rather than assuming all firms deserve the same multiple. When compared with the current P/E of 43.27x, the Fair Ratio of 26.67x suggests the shares are trading above what this framework would view as a fair level.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Digi International Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about Digi International, linked to a clear forecast and a fair value that you can compare with the current price.
On Simply Wall St, within the Community page used by millions of investors, a Narrative lets you set out how you see Digi’s future revenue, earnings and margins, then ties those assumptions to a fair value estimate that updates automatically when new information such as news or earnings is added.
This helps you decide whether Digi International looks attractive or expensive to you personally, because you can continuously compare your Narrative fair value with the live market price rather than relying only on static metrics like a P/E snapshot.
For example, one Digi International Narrative on the platform currently anchors to a fair value of about US$30.00, while another sees fair value closer to US$55.00. This shows how two investors, looking at the same company, can reach very different conclusions based on their story and assumptions about its IoT connectivity, recurring revenue and margin profile.
For Digi International, however, we will make it really easy for you with previews of two leading Digi International Narratives:
On Simply Wall St each Narrative ties a detailed forecast to a fair value estimate, so you can quickly see which story about Digi lines up more closely with your own expectations.
🐂 Digi International Bull Case
Fair value: about US$50.50 per share
Current price vs this fair value: around 3.3% below the narrative fair value
Revenue growth assumption: 9.65% per year
- Analysts backing this view see the shift to subscription and recurring revenue, along with demand for secure edge and cloud connected solutions, as key supports for more stable revenue and higher margins over time.
- They highlight Digi's supply chain flexibility, relocation of manufacturing away from China, and focus on high recurring revenue acquisitions as important supports for earnings and free cash flow.
- The main watchpoints in this story are reliance on recurring revenue growth, regional demand uncertainty in areas such as APAC and Europe, and competition or tariff related cost pressure that could weigh on margins.
🐻 Digi International Bear Case
Fair value: about US$45.00 per share
Current price vs this fair value: around 8.5% above the narrative fair value
Revenue growth assumption: 8.46% per year
- This more cautious view leans on risks from geopolitical tension, trade barriers, and rising compliance and security costs that could pressure Digi's supply chain, margins, and long term profitability.
- It also assumes that rapid technology change, shorter product cycles, and strong competition in IoT hardware and services could limit revenue growth and recurring revenue expansion.
- Supporters of this narrative still factor in earnings growth, but they anchor on a lower future P/E multiple and a fair value closer to the lower end of analyst targets, which leaves less room if expectations around revenue or margins prove optimistic.
If you want to turn these previews into your own view on Digi International, you can start by asking which assumptions feel more realistic to you on revenue growth, margins, and the P/E you are comfortable paying, then build a Narrative that matches that view and compare its fair value with today’s price.
Curious how numbers become stories that shape markets? Explore Community Narratives
Do you think there's more to the story for Digi International? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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