Thinking about whether Digi International could be a hidden gem or overpriced stock? You are not alone, especially if you are curious about what really makes a tech company worth its current price.
In just the past week, Digi International’s stock jumped 8.4%, adding to a 31.5% gain year to date and an impressive 127.7% surge over the past five years.
Much of this momentum has been fueled by recent headlines around Digi’s new product launches and key partnerships in the Internet of Things space. These developments have given investors plenty to think about regarding Digi’s growth prospects and overall risk profile.
Despite this buzz, Digi International scores only 2 out of 6 on our valuation checks for undervalued companies. This suggests there is room for debate on how attractive it is today. We will break down the main valuation approaches, and at the end, reveal an even better way to put these numbers in context.
Digi International scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s dollars. In essence, it answers the question of what all of Digi International’s expected future profits are worth right now.
Digi International’s current Free Cash Flow is $105.8 million. According to analysts, Free Cash Flow is expected to grow steadily, reaching around $107.6 million by the end of fiscal 2027. Moving further, projections using modest growth rates suggest Free Cash Flow could grow to $151.3 million by 2035. It is important to note that only the first few years are based on analyst estimates, with long-term figures extrapolated by Simply Wall St.
Based on the 2 Stage Free Cash Flow to Equity model, this steady cash generation gives Digi International an intrinsic value of $59.21 per share. With the stock currently trading about 34.9% below this fair value estimate, the DCF model points to the shares being significantly undervalued at current prices.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Digi International is undervalued by 34.9%. Track this in your watchlist or portfolio, or discover 876 more undervalued stocks based on cash flows.
DGII Discounted Cash Flow as at Nov 2025
The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies like Digi International because it directly links the market’s expectations to a company’s bottom-line earnings. Investors often look to the PE ratio as a quick gauge of whether a stock seems reasonably priced in the context of its profitability.
It is important to consider that what counts as a normal or fair PE ratio depends on growth expectations and risk. Fast-growing or less risky companies tend to justify higher PE ratios, while slower-growing or riskier ones usually trade at lower valuations.
Digi International currently trades at a PE of 35.1x. This is above both its peer average of 22.5x and the wider communications industry average of 31.7x. A more refined benchmark is Simply Wall St’s proprietary “Fair Ratio,” which calculates what Digi’s PE should be after factoring in its earnings growth forecast, margins, market cap, industry, and risk profile. For Digi International, the Fair Ratio is 27.9x.
The Fair Ratio provides a more personalized benchmark than simply comparing with peers or industry averages, as it accounts for the unique combination of the company’s growth, profitability, and business risks.
Because Digi International’s current PE of 35.1x is notably higher than its Fair Ratio of 27.9x, the stock appears to be trading above what is considered justified based on these factors.
Result: OVERVALUED
NasdaqGS:DGII PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1402 companies where insiders are betting big on explosive growth.
Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives are a simple but powerful tool that allow you to connect your outlook on Digi International—your story about its future opportunities, risks, and business drivers—with a clear financial forecast and a personalized estimate of fair value.
With Narratives, investors go beyond just plugging in numbers by describing the assumptions, confidence, and reasoning that shape their expectations around revenue growth, profit margins, and overall company performance. Narratives are easy to create and update on Simply Wall St’s Community page, where millions of investors share their perspectives and debate fair value using both numbers and analysis.
Narratives help make buy and sell decisions easier by directly comparing your own Fair Value estimate for Digi International against the current share price. As new information emerges, such as news, earnings releases, or management updates, these Narratives are refreshed automatically so your view stays current and relevant.
For example, some investors may build a bullish Narrative around Digi’s rapid shift to recurring software revenue, supporting a fair value up to $50 per share, while more cautious users might focus on margin risks and prefer a lower fair value, closer to $30. By making your assumptions explicit and comparing them with others, Narratives empower you to invest with clarity and confidence.
Do you think there’s more to the story for Digi International? Head over to our Community to see what others are saying!
NasdaqGS:DGII Community Fair Values as at Nov 2025
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.
Companies discussed in this article include DGII.
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