Digi International Crushes Estimates

Seth Jayson, The Motley Fool
Updated

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 thisarticle 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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