Analyzing Digi International (DGII) and Communications Systems (JCS)
Communications Systems (NASDAQ: JCS) and Digi International (NASDAQ:DGII) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.
Earnings and Valuation
This table compares Communications Systems and Digi International’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Communications Systems||$91.24 million||0.45||-$1.87 million||($0.98)||-4.67|
|Digi International||$186.98 million||1.57||$16.27 million||$0.33||33.49|
Digi International has higher revenue and earnings than Communications Systems. Communications Systems is trading at a lower price-to-earnings ratio than Digi International, indicating that it is currently the more affordable of the two stocks.
Communications Systems pays an annual dividend of $0.16 per share and has a dividend yield of 3.5%. Digi International does not pay a dividend. Communications Systems pays out -16.3% of its earnings in the form of a dividend.
This table compares Communications Systems and Digi International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and price targets for Communications Systems and Digi International, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Communications Systems currently has a consensus target price of $6.00, indicating a potential upside of 31.00%. Digi International has a consensus target price of $14.50, indicating a potential upside of 31.22%. Given Digi International’s higher probable upside, analysts plainly believe Digi International is more favorable than Communications Systems.
Insider and Institutional Ownership
31.8% of Communications Systems shares are owned by institutional investors. Comparatively, 78.3% of Digi International shares are owned by institutional investors. 17.5% of Communications Systems shares are owned by insiders. Comparatively, 6.9% of Digi International shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Volatility & Risk
Communications Systems has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Digi International has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500.
Digi International beats Communications Systems on 11 of the 15 factors compared between the two stocks.
About Communications Systems
Communications Systems, Inc. (CSI) operates directly and through its subsidiaries located in the United States, Costa Rica and the United Kingdom. The Company operates through three segments: Suttle, Transition Networks and JDL Technologies (JDL). The Company provides physical connectivity infrastructure products and services for global deployments of broadband networks. The Company is principally engaged through its subsidiary and business unit, Suttle, Inc., in the manufacture and sale of connectivity infrastructure products for broadband and voice communications, and through its another subsidiary and business unit, Transition Networks, Inc., in the manufacture and sale of core media conversion products for broadband networks. Through its JDL Technologies, Inc. subsidiary and business unit, CSI provides information technology (IT) solutions, including network design, computer infrastructure installations, IT service management, network security and network operation services.
About Digi International
Digi International Inc. is a provider of mission and business-critical machine-to-machine (M2M) and Internet-of-Things (IoT) connectivity products and services. The Company creates connected products and deploys and manages critical communications infrastructures in a range of environments. It offers four categories of hardware products: cellular routers and gateways, radio frequency (RF), embedded and network products. The Company’s cellular product category includes its cellular routers and all gateways. The Company’s RF product category includes its XBee modules, as well as other RF Solutions. Its embedded product category includes Digi Connect and Rabbit embedded systems on module and single board computers. Its network product category includes console and serial servers and universal serial bus (USB) connected products. The Company’s service offerings include wireless design services, Digi Device Cloud (which includes Digi Remote Manager) and enterprise support services.
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