AudioCodes (AUDC) vs. Digi International (DGII) Financial Review

AudioCodes (NASDAQ: AUDC) and Digi International (NASDAQ:DGII) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
AudioCodes 11.84% 8.33% 4.75%
Digi International 5.16% 3.24% 2.95%

Analyst Ratings

This is a summary of current recommendations and price targets for AudioCodes and Digi International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AudioCodes 0 1 2 0 2.67
Digi International 0 0 4 0 3.00

AudioCodes currently has a consensus target price of $7.75, suggesting a potential upside of 4.73%. Digi International has a consensus target price of $14.50, suggesting a potential upside of 42.86%. Given Digi International’s stronger consensus rating and higher possible upside, analysts clearly believe Digi International is more favorable than AudioCodes.

Valuation and Earnings

This table compares AudioCodes and Digi International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AudioCodes $145.57 million 1.62 $16.23 million $0.54 13.70
Digi International $181.63 million 1.50 $9.36 million $0.35 29.00

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

Institutional and Insider Ownership

22.1% of AudioCodes shares are owned by institutional investors. Comparatively, 77.4% of Digi International shares are owned by institutional investors. 48.8% of AudioCodes shares are owned by insiders. Comparatively, 6.8% of Digi International shares are owned 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 and Volatility

AudioCodes has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500. Comparatively, Digi International has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500.

AudioCodes Company Profile

AudioCodes Ltd. designs, develops and sells Voice over-Internet Protocol (VoIP) and converged VoIP, and data networking solutions, products and applications that facilitate Unified Communications (UC) and Contact Center (CC) services. The Company categorizes its products and services into two main business lines: network and technology. Network products consist of customer premises equipment (CPE), gateways for the enterprise and service provider (or carrier) markets and of carrier-grade-oriented low- and mid-density media gateways for service providers and Enterprise Session Border Controls (ESBCs). Complementing its media gateways and session border gateways as network products are its multi-service business routers (MSBR), Internet Protocol (IP) phones, media servers, mobile VoIP solutions and value added application products. Technology products consist of its chips and boards business products. Its products are deployed in enterprise, service provider cloud networks.

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.

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