DGII
Digi International Inc.
$74.73
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 35.8% below fair value
You pay
$74.73
Bear
$61.59
Fair
$116.45
Bull
$185.57
Bear
$61.59
-17.6%
12% stage 1 growth, 11% discount
Fair
$116.45
+55.8%
20% stage 1 growth, 11% discount
Bull
$185.57
+148.3%
26% stage 1 growth, 11% discount
Adjust Assumptions
20.1%
11.0%
3.0%
Key Value Driver
FCF growth rate (20% base case)
Terminal Value % of EV
46%
Implied Market Multiple
30.2x
Market is pricing in (growth)
14.5%
vs 20.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$79.00
Divergence from AlphaVal
47%
Summary
Using a two-stage FCF DCF with 20% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $116.45 per share.
Warnings
Stock-based employee pay equals 38% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $79.00 (from 18 analysts). Our estimate is 47% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions