Digi International (DGII) vs. Arista Networks (ANET) Head to Head Analysis

Digi International (NASDAQ: DGII) and Arista Networks (NYSE:ANET) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, dividends, profitability, earnings and risk.

Profitability

This table compares Digi International and Arista Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digi International 1.34% 1.91% 1.74%
Arista Networks 25.10% 24.76% 15.89%

Institutional and Insider Ownership

76.4% of Digi International shares are held by institutional investors. Comparatively, 58.2% of Arista Networks shares are held by institutional investors. 6.8% of Digi International shares are held by company insiders. Comparatively, 28.1% of Arista Networks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Digi International and Arista Networks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digi International 0 0 4 0 3.00
Arista Networks 0 13 18 0 2.58

Digi International currently has a consensus target price of $14.50, suggesting a potential upside of 42.86%. Arista Networks has a consensus target price of $228.07, suggesting a potential downside of 22.05%. Given Digi International’s stronger consensus rating and higher possible upside, equities analysts clearly believe Digi International is more favorable than Arista Networks.

Volatility and Risk

Digi International has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, Arista Networks has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500.

Earnings and Valuation

This table compares Digi International and Arista Networks’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digi International $181.63 million 1.51 $9.36 million $0.09 112.79
Arista Networks $1.13 billion 18.94 $184.18 million $4.84 60.45

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

Summary

Arista Networks beats Digi International on 9 of the 14 factors compared between the two stocks.

About Digi International

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.

About Arista Networks

Arista Networks, Inc. is a supplier of cloud networking solutions that use software innovations to address the needs of Internet companies, cloud service providers and data centers for enterprise support. It develops, markets and sells cloud networking solutions, which consist of its Gigabit Ethernet switches and related software. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), a set of network applications and its Ethernet switching and routing platforms. The programmability of EOS has allowed it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has also allowed it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. EOS supports cloud and virtualization solutions, including VMware NSX, Microsoft System Center and other cloud management frameworks.

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