Financial Analysis: Genasys (NASDAQ:GNSS) versus Digi International (NASDAQ:DGII)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Digi International	$430.22 million	6.55	$40.80 million	$1.26	58.89
Genasys	$40.76 million	2.02	-$18.11 million	($0.13)	-13.92

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Digi International	9.63%	12.16%	8.48%
Genasys	-10.86%	-435.06%	-9.83%

Insider & Institutional Ownership

95.9% of Digi International shares are owned by institutional investors. Comparatively, 40.0% of Genasys shares are owned by institutional investors. 3.4% of Digi International shares are owned by company insiders. Comparatively, 8.3% of Genasys shares are owned by company 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

Digi International has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Genasys has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Digi International and Genasys, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Digi International	0	3	4	0	2.57
Genasys	1	0	2	0	2.33

Digi International presently has a consensus target price of $82.40, indicating a potential upside of 11.05%. Genasys has a consensus target price of $4.20, indicating a potential upside of 132.04%. Given Genasys’ higher possible upside, analysts clearly believe Genasys is more favorable than Digi International.

Summary

Digi International beats Genasys on 12 of the 14 factors compared between the two stocks.

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.

About Genasys

Genasys Inc. engages in the design, development, and commercialization of critical communications hardware and software solutions to alert, inform, and protect people principally in North and South America, Europe, the Middle East, Asia, and internationally. The company operates through two segments, Hardware and Software. It provides Genasys Protect ALERT, an interactive, cloud-based SaaS solution that is designed to enable SLED and enterprise customers to send critical information to at-risk individuals or groups when an emergency occurs using emails, voice calls, text messages, panic buttons, desktop alerts, TV, social media, and other; and Genasys Protect EVAC that enables responding agencies to determine and communicate the proper scope of a response or evacuation by replacing guesswork with data-driven intelligence; and Genasys Protect CONNECT, an instant communication platform that enables first responders and public safety personnel to collaborate and share information in a single space with text, videos, images, and audio from any location. The company also offers Genasys Protect ACOUSTICS, a mass notification speaker system with Genasys protect command-and-control software; and long range acoustic devices, such as acoustic hailing devices which are used to project alert tones and audible voice messages. It sells its products directly to governments, militaries, end-users, and commercial companies. The company was formerly known as LRAD Corporation. Genasys Inc. was incorporated in 1992 and is based in San Diego, California.