Digi International (DGII) Soars 5.1%: Is Further Upside Left in the Stock?
Digi International DGII shares ended the last trading session 5.1% higher at $27.79. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 13.5% gain over the past four weeks.
The increase in share price is attributed to robust demand for industrial IIoT products which is driving both the company’s bookings and backlog. The company offers IoT connectivity products, services and solutions globally.
Digi International is benefiting from increasing demand for console server and cellular solutions along with healthy growth opportunities in smart city and mass transit as well as data center and edge applications’ markets. Shift to subscription-centric model and acquisitions like Ventus bode well.
For the third quarter of fiscal 2022, the company is expecting revenue in the range of $94-$98 million, representing 19% to 24% growth on a year over year basis. Non-GAAP earnings per share are expected in the range of 37-40 cents. The company is scheduled to report fiscal third quarter earnings on Aug 4, 2022.
This provider of communication adapters is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +322.2%. Revenues are expected to be $95.93 million, up 21.3% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Digi International, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DGII going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Digi International is a member of the Zacks Computer - Networking industry. One other stock in the same industry, Radcom (RDCM), finished the last trading session 2.2% lower at $11.35. RDCM has returned 4.5% over the past month.
Radcom's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.01. Compared to the company's year-ago EPS, this represents a change of +150%. Radcom currently boasts a Zacks Rank of #3 (Hold).
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