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

Analyst Ratings

This is a summary of recent recommendations and price targets for Digi International and Gilat Satellite Networks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digi International 0 0 4 0 3.00
Gilat Satellite Networks 0 0 0 0 N/A

Digi International presently has a consensus target price of $15.33, suggesting a potential upside of 65.77%. Given Digi International’s higher probable upside, equities research analysts plainly believe Digi International is more favorable than Gilat Satellite Networks.

Profitability

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

Net Margins Return on Equity Return on Assets
Digi International 4.74% 3.17% 2.86%
Gilat Satellite Networks 1.27% 6.59% 3.70%

Valuation and Earnings

This table compares Digi International and Gilat Satellite Networks’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Digi International $186.98 million 1.31 $16.27 million $0.33 28.03
Gilat Satellite Networks $289.16 million 1.04 $25.44 million $0.07 78.43

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

Institutional and Insider Ownership

78.3% of Digi International shares are held by institutional investors. Comparatively, 8.0% of Gilat Satellite Networks shares are held by institutional investors. 6.9% of Digi International shares are held by insiders. Comparatively, 1.1% of Gilat Satellite Networks shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Digi International has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, Gilat Satellite Networks has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Summary

Digi International beats Gilat Satellite Networks on 9 of the 13 factors compared between the two stocks.

Digi International Company Profile

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.

Gilat Satellite Networks Company Profile

Gilat Satellite Networks Ltd. is a provider of satellite-based broadband communications. The Company operates through three segments: Commercial, Mobility and Services divisions. The Company designs and manufactures satellite ground segment and networking communications equipment, which it sells to its customers either as network components (modems, Block Up converters (BUCs), antennas) or as complete network solutions (which include hubs and related terminals and services) or turnkey projects. The equipment that the Company develops includes commercial Very Small Aperture Terminals (VSAT) systems, defense and homeland security satellite communications systems, solid-state power amplifiers (SSPAs), BUCs, low-profile antennas, on-the-Move/on-the-Pause terminals and modems. The Company’s equipment is used by satellite operators, service providers, telecommunications operators, system integrators, government and defense organizations, large corporations and enterprises.

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