Digi International (NASDAQ: DGII) and ARRIS International (NASDAQ:ARRS) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Insider & Institutional Ownership

77.8% of Digi International shares are owned by institutional investors. Comparatively, 86.6% of ARRIS International shares are owned by institutional investors. 6.9% of Digi International shares are owned by insiders. Comparatively, 0.9% of ARRIS International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Digi International and ARRIS International’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digi International $181.63 million 1.42 $9.36 million $0.35 27.72
ARRIS International $6.83 billion 0.79 $18.10 million $0.87 33.26

ARRIS International has higher revenue and earnings than Digi International. Digi International is trading at a lower price-to-earnings ratio than ARRIS International, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Digi International has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500. Comparatively, ARRIS International has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Digi International and ARRIS International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digi International 0 1 3 0 2.75
ARRIS International 0 2 6 0 2.75

Digi International presently has a consensus target price of $14.50, indicating a potential upside of 49.48%. ARRIS International has a consensus target price of $34.13, indicating a potential upside of 17.92%. Given Digi International’s higher probable upside, analysts plainly believe Digi International is more favorable than ARRIS International.

Profitability

This table compares Digi International and ARRIS International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digi International 5.16% 3.24% 2.95%
ARRIS International 2.51% 14.02% 5.89%

Summary

ARRIS International beats Digi International on 7 of the 13 factors compared between the two stocks.

Digi International Company Profile

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.

ARRIS International Company Profile

ARRIS International plc is a media entertainment and data communications solutions provider. The Company operates in two segments: Customer Premises Equipment (CPE), and Network & Cloud (N&C). The Company enables service providers, including cable, telephone, and digital broadcast satellite operators, and media programmers to deliver media, voice and Internet Protocol (IP) data services to their subscribers. It is engaged in offering set-tops, digital video and IP television (IPTV) distribution systems, broadband access infrastructure platforms, and associated data and voice CPE, which it also sells directly to consumers through retail channels. Its solutions are complemented by an array of services, including technical support, repair and refurbishment, and system design and integration. The CPE segment consists of CPE Products-Video and CPE Products-Broadband. The N&C segment consists of Infrastructure Products, Cloud Software and Global Services.

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