Digi International Crushes Estimates

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Digi International (NAS: DGII) reported earnings on Jan. 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Digi International met expectations on revenue and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank, and earnings per share dropped significantly.

Gross margins increased, operating margins dropped, net margins shrank.

Revenue details
Digi International reported revenue of $47 million. The four analysts polled by S&P Capital IQ expected sales of $47 million. Sales were 3.5% lower than the prior-year quarter's $48 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
EPS came in at $0.03. The four earnings estimates compiled by S&P Capital IQ averaged $0.02 per share. GAAP EPS of $0.03 for Q1 were 67% lower than the prior-year quarter's $0.09 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 53.5%, 70 basis points better than the prior-year quarter. Operating margin was 2.3%, 320 basis points worse than the prior-year quarter. Net margin was 1.6%, 320 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $55 million. On the bottom line, the average EPS estimate is $0.11.

Next year's average estimate for revenue is $221 million. The average EPS estimate is $0.50.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 101 members out of 107 rating the stock outperform, and six members rating it underperform. Among 26 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 26 give Digi International a green thumbs-up, and give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Digi International is outperform, with an average price target of $15.00.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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