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Digi International (DGII) Expands Its $350 Million Credit Facility, Is It A Bargain?

Simply Wall St · 1d ago

Digi International (DGII) recently refinanced and expanded its senior secured revolving credit facility, lifting total borrowing capacity to $350 million. The move centers on more flexible terms that support acquisitions and general corporate uses.

Digi International's latest refinancing comes after a sharp pullback, with the 30-day share price return down 15.10% and the 7-day return down 8.46%, even though the 1-year total shareholder return is 99.94% and the 5-year total shareholder return is 217.44%. This pattern indicates that recent momentum has cooled in the short term, while longer term shareholders have still seen very strong gains overall.

Compare how Digi International stacks up against other companies using resilient balance sheets to fund growth and acquisitions by reviewing the hand picked list of solid balance sheet and fundamentals (53 results).

For Digi International, the bullish story leans on strong shareholder returns, growing earnings, and fresh firepower for acquisitions. The bear case points to the recent pullback and higher leverage capacity. Which side does the current valuation support?

Most Popular Narrative: 18.8% Undervalued

The most followed valuation narrative pegs Digi International's fair value at $85.40, above the last close of $69.36, framing the refinancing against a higher long term earnings story.

The accelerating transition of customers to Digi's subscription-based and recurring revenue solutions, including higher attach rates on IoT products such as cellular routers and infrastructure management devices, points to ongoing double-digit annual recurring revenue (ARR) growth and improved profit margins, boosting both revenue stability and long-term earnings.

Read the complete narrative. Read the complete narrative.

Want to see what sits behind that earnings ramp? The narrative leans on recurring revenue, rising margins, and a future profit multiple that assumes real staying power.

The fair value view uses an 8.88% discount rate and leans heavily on faster earnings growth than revenue, expanding profitability, and a higher future P/E multiple than the broader US Communications sector. Result: Fair Value of $85.40 (UNDERVALUED).

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to watch for any slowdown in recurring revenue or weaker regional demand that could challenge Digi International's higher earnings and valuation narrative.

Find out about the key risks to this Digi International narrative.

Another View on Digi International's Valuation

The first narrative paints Digi International as about 18.8% undervalued, yet the current P/E of 54x tells a different story. That ratio is higher than the US Communications industry at 33.9x, above peers at 37.5x, and well above a fair ratio of 31.6x. This combination signals meaningful valuation risk if expectations soften.

For investors, the choice is whether the earnings growth outlook justifies paying a premium that is this far above the fair ratio and sector benchmarks, or whether it leaves less room for error if the recurring revenue story hits a bump.

See what the numbers say about this price — find out in our valuation breakdown.

NasdaqGS:DGII P/E Ratio as at Sep 2026
NasdaqGS:DGII P/E Ratio as at Sep 2026

Next Steps

After all of this, are you leaning bullish or cautious on Digi International? Act quickly, review the key positives for yourself, and then weigh your view against the 4 key rewards.

Looking for more investment ideas beyond Digi International?

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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.