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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Digi International Inc. (NASDAQ:DGII), it is a company that has been able to sustain great financial health, trading at an attractive share price. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Digi International here.
Flawless balance sheet and undervalued
DGII is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that DGII has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Looking at DGII's capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future. DGII is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of DGII's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, DGII's share price is trading below the group's average. This supports the theory that DGII is potentially underpriced.
For Digi International, I've compiled three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for DGII’s future growth? Take a look at our free research report of analyst consensus for DGII’s outlook.
- Historical Performance: What has DGII's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DGII? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.