Digi International Inc (DGII)

Return on equity (ROE)

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Net income	US$ in thousands	24,770	19,383	10,366	8,411	9,958
Total stockholders’ equity	US$ in thousands	540,488	501,513	472,517	371,500	348,978
ROE		4.58%	3.86%	2.19%	2.26%	2.85%

September 30, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $24,770K ÷ $540,488K
= 4.58%

Certainly! The return on equity (ROE) of Digi International, Inc. over the past five years shows a fluctuating trend, ranging from 2.19% in 2021 to 4.58% in 2023. ROE is a measure of a company's profitability that evaluates how effectively it is using shareholders' equity to generate profit.

The upward trend in ROE from 2021 to 2023 indicates an improvement in Digi International's ability to generate profits from shareholders' equity. This can be a positive sign for investors and reflects that the company is becoming more efficient in utilizing its equity to create earnings.

Although the ROE has increased in recent years, it is still relatively low, suggesting that the company may not be efficiently utilizing its equity to generate higher profits compared to its industry peers. A higher ROE indicates that a company is generating more profit with the same level of equity, thus making it a more attractive investment.

To understand the factors driving the changes in ROE, further analysis of the company's net income, total equity, and financial leverage is necessary. This will provide insights into whether the increase in ROE is a result of improved profitability, increased financial leverage, or a combination of both.

In conclusion, while Digi International's ROE has shown improvement in recent years, it remains modest. Investors should closely monitor the company's profitability and equity management to assess its ability to generate sustainable returns for shareholders.