NETGEAR (NASDAQ:NTGR) versus Digi International (NASDAQ:DGII) Head-To-Head Analysis

NETGEAR (NASDAQ:NTGR) and Digi International (NASDAQ:DGII) are both small-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, risk, valuation, earnings, institutional ownership, analyst recommendations and profitability.

Profitability

This table compares NETGEAR and Digi International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NETGEAR	3.72%	-7.63%	-4.85%
Digi International	10.07%	11.00%	8.02%

Risk & Volatility

NETGEAR has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500. Comparatively, Digi International has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

83.0% of NETGEAR shares are held by institutional investors. Comparatively, 95.9% of Digi International shares are held by institutional investors. 2.3% of NETGEAR shares are held by company insiders. Comparatively, 3.3% of Digi International shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares NETGEAR and Digi International”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NETGEAR	$673.76 million	1.13	$12.36 million	$0.82	32.39
Digi International	$424.05 million	2.88	$22.50 million	$1.13	29.13

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for NETGEAR and Digi International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NETGEAR	0	0	1	0	3.00
Digi International	0	2	1	0	2.33

NETGEAR currently has a consensus price target of $29.00, suggesting a potential upside of 9.19%. Digi International has a consensus price target of $35.67, suggesting a potential upside of 8.34%. Given NETGEAR’s stronger consensus rating and higher probable upside, equities analysts clearly believe NETGEAR is more favorable than Digi International.

Summary

Digi International beats NETGEAR on 8 of the 13 factors compared between the two stocks.

About NETGEAR

NETGEAR, Inc. provides connectivity solutions the Americas; Europe, the Middle East, Africa; and the Asia Pacific. The company operates in two segments, Connected Home, and NETGEAR for Business. The Connected Home segment offers Wi-Fi routers and home Wi-Fi mesh systems, Wi-Fi hotspots, digital displays, broadband modems, Wi-Fi gateways, Wi-Fi range extenders, powerline adapters, and Wi-Fi network adapters; and provides value-added service offerings, including security and privacy, technical support, and parental controls. The NETGEAR for Business segment provides pro AV Solutions; pro routers; enterprise grade cloud managed or standalone access points; general purpose ethernet switches; NETGEAR Insight remote management software; and NETGEAR engage controller. It markets and sells its products through wholesale distributors, traditional and online retailers, direct market resellers, value-added resellers, and broadband service providers, as well as through its direct online store. The company was incorporated in 1996 and is headquartered in San Jose, California.

About Digi International

Digi International Inc. provides business and mission-critical Internet of Things (IoT) products, services, and solutions in the United States, Europe, the Middle East, Africa, and internationally. The company operates in two segments, IoT Products & Services, and IoT Solutions. It offers cellular routers for mission-critical wireless connectivity; cellular modules to embed cellular communications abilities into the products to deploy and manage intelligent and secure cellular connected products; console servers to provide secure and remote access to network equipment in data centers and at edge locations; and radio frequency products, including embedded wireless modules, off-the-shelf gateways, modems, and adapters under the Digi XBee brand. The company provides embedded system products under the Digi Connect, ConnectCore, and Rabbit brands; and infrastructure management products, comprising of serial servers, which offers serial port-to-Ethernet integration of devices into wired Ethernet networks; and universal serial bus solutions. In addition, it offers Digi Remote Manager and Lighthouse, a recurring revenue cloud-based service that provides a secure environment for customers to manage their connected device deployment and network devices; SmartSense by Digi for monitoring wirelessly the temperature of food and other perishable or sensitive goods, monitor facilities or pharmacies by tracking the completion of operating tasks by employees, as well as quality control and incident management for food service, healthcare, and transportation/logistics industries; and Ventus which provides MNaaS solutions. Further, the company provides professional services, such as site planning, implementation management, application development, and customer training; data plan subscriptions; and enhanced technical support services, as well as Digi Wireless Design Services. Digi International Inc. was incorporated in 1985 and is headquartered in Hopkins, Minnesota.