$Digi International (DGII.US)$Revenue has grown rapidly over...
$Digi International(DGII.US$Revenue has grown rapidly over the past 5 years, with an average growth rate of 16.4%, of which an increase of 25.8% in 2022. Due to rapid growth in operating expenses, operating profit fell sharply by 77% in 2018, then surged by 48% in the past 3 years. Among them, in 2022, it surged 1.8 times. Net profit fluctuated more due to increased interest burdens and other net income effects. Other revenue reached 6 million in 2022. If this part of the influence is removed, net profit should be around 14 million, and the corresponding growth rate dropped to 35%
One bad observation is that interest expenses have changed from income to expenses in the past 5 years, reaching 0.2 billion dollars in 2022, accounting for 63% of operating profit. The interest burden is extremely heavy. The high leverage ratio may also be a source of recent growth.
2023Q1 revenue increased 30%, operating profit increased 2 times to 12 million, and net profit increased to 5.78 million.
The balance sheet shows that goodwill and other intangible assets increased by 300 million dollars in 2022. Large-scale mergers and acquisitions were probably carried out. So the recent high growth is likely the result of mergers and acquisitions, and sustainability is questionable.
Currently, the price-earnings ratio is 62, and the price-earnings ratio TTM has dropped to 50. If net profit for the whole year reaches 0.3 billion, the price-earnings ratio will drop to 40. Observe more quarters to confirm the sustainability of growth before making a judgment.
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