Digi International (DGII) Stock May Be Near Fair Value Today

Digi International has been on a strong multiyear run, and the share price now asks investors to think carefully about what its current cash flows really support. With the stock trading around US$72.74 at the last close, the question is how well that tag lines up with the value implied by its future cash generation.

• Over the past 5 years, Digi International has returned about 217.9%, which puts a lot of weight on whether its projected cash flows can keep backing that kind of move.
• The business model relies heavily on turning connected devices and software into recurring revenue, which can influence how predictable its future cash flows look and how investors treat the timing of that money.
• If you'd rather focus on earnings, this one's for you. See why Digi International's 56.6x P/E tells a different valuation story.

The issue now is whether Digi International's current share price is adequately supported by the intrinsic value suggested by its cash flows.

If you want to stress test Digi International's valuation question against a broader set of ideas around pricing and quality, take a look at 33 high quality undervalued stocks.

Where Does Digi International Sit on Cash Flow?

The Discounted Cash Flow (DCF) model here is built around Digi International's ability to convert its connected hardware and software into cash over time. On the latest numbers, the group generated roughly $135.7 million of free cash flow over the past twelve months, and the forecast curve assumes that this cash generation grows rather than shrinks as the subscription style engine matures.

Analyst projections point to higher free cash flow by 2028 and then a gentler climb over the following years, which fits a business shifting from building out its platform to harvesting more recurring dollars from it. When those future streams are discounted back and stacked up against the current share price of US$72.74, the DCF suggests Digi International's estimated intrinsic value is broadly in line with where the stock trades today. Find out what Digi International could be worth using our Discounted Cash Flow (DCF) estimate.

The Digi International Narrative: What Would Justify Today's Price?

Narratives pick up where the DCF leaves off for Digi International, spelling out which paths for revenue growth, profitability and earnings would need to play out for the stock to be worth much more or much less than today’s quote, and they sit on Simply Wall St’s Community page. Instead of a single output from a ratio or valuation model, they lay out the future that number relies on so you can watch how real results compare over time.

One of the top community narratives on Digi International: 15% undervalued

"For Digi International, analysts expect the continued shift toward higher margin recurring ARR in industrial IoT solutions to be a key driver..."

Discover why this Narrative puts Digi International at 15% undervalued.

The Digi International share price is only one part of the investment story

Before you decide how Digi International fits into your portfolio, it is worth asking who is steering the business and whether their pay truly lines up with your interests. See who runs Digi International and how they are paid.

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