Critical Comparison: Comtech Telecomm. (CMTL) versus Digi International (DGII)

Comtech Telecomm. (NASDAQ: CMTL) and Digi International (NASDAQ:DGII) are both small-cap communications & networking – nec companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Dividends

Comtech Telecomm. pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Digi International does not pay a dividend. Comtech Telecomm. pays out 56.3% of its earnings in the form of a dividend.

Institutional and Insider Ownership

85.9% of Comtech Telecomm. shares are held by institutional investors. Comparatively, 77.4% of Digi International shares are held by institutional investors. 7.0% of Comtech Telecomm. shares are held by insiders. Comparatively, 6.8% of Digi International shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Comtech Telecomm. has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500. Comparatively, Digi International has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Comtech Telecomm. 3.11% 1.87% 1.04%
Digi International 5.16% 3.24% 2.95%

Earnings and Valuation

This table compares Comtech Telecomm. and Digi International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Comtech Telecomm. $550.37 million 0.94 $15.82 million $0.71 30.86
Digi International $181.63 million 1.50 $9.36 million $0.35 29.00

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Comtech Telecomm. and Digi International, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Comtech Telecomm. 0 2 3 0 2.60
Digi International 0 0 4 0 3.00

Comtech Telecomm. presently has a consensus price target of $20.63, indicating a potential downside of 5.86%. Digi International has a consensus price target of $14.50, indicating a potential upside of 42.86%. Given Digi International’s stronger consensus rating and higher probable upside, analysts clearly believe Digi International is more favorable than Comtech Telecomm..

About Comtech Telecomm.

Comtech Telecommunications Corp. designs, develops, produces and markets products, systems and services for communications solutions. The Company operates through two segments: Commercial Solutions and Government Solutions. It offers communications solutions, including command and control technologies, safety and security technologies and enterprise technologies. Its Commercial Solutions segment provides satellite communications (such as satellite earth station modems and traveling wave tube amplifiers), public safety systems (such as next generation 911 technologies) and enterprise application technologies (such as messaging and trusted location-based technologies). The Government Solutions segment includes command and control technologies, troposcatter technologies, and radio frequency power and switching technologies. It serves system and network suppliers in the global satellite, defense, broadcast and aerospace industries, and the United States federal government, among others.

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.

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