$Digi International (DGII.US)$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 25.8% in 2022. Due to rapid growth in operating expenses, operating profit fell sharply by 77% in 2018, then surged. The average growth rate in the past 3 years was 48%, of which it surged 1.8 times in 2022. Net profit fluctuated more due to increased interest burdens and other net revenue. Other revenue reached 6 million in 2022. If this part of the impact is removed, net profit should be around 14 million, and the corresponding growth rate will drop to 35%
One bad observation is that interest expenses have changed from income to expenses in the past 5 years, reaching 0.2 billion in 2022, accounting for 63% of operating profit. The interest burden is extremely heavy, and the high leverage ratio may also be the source of recent growth.
In 2023Q1, revenue increased 30%, operating profit doubled to reach $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 the result of mergers and acquisitions, so the recent high growth is most 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 the annual net profit reaches 0.3 billion, the price-earnings ratio will drop to 40. Observe a few more quarters to confirm the continuation of growth before making a judgment.
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