Digi International (STU:DGI) ROC % : 3.78% (As of Mar. 2024)

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What is Digi International ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Digi International's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 3.78%.

As of today (2024-05-26), Digi International's WACC % is 9.99%. Digi International's ROC % is 5.81% (calculated using TTM income statement data). Digi International earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Digi International ROC % Historical Data

The historical data trend for Digi International's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Digi International ROC % Chart

Digi International Annual Data

Trend

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

Sep23

ROC %

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3.16

3.39

4.22

5.74

6.10

Digi International Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															6.17	7.15	6.11	5.72	3.78

Digi International ROC % Calculation

Digi International's annualized Return on Capital (ROC %) for the fiscal year that ended in Sep. 2023 is calculated as:

	ROC % (A: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Sep. 2022 )	+	Invested Capital (A: Sep. 2023 ))	/ count )
=	46.939 * ( 1 - 0.6% )	/	( (794.391	+	736.084)	/ 2 )
=	46.657366	/	765.2375
=	6.10 %

where

	Invested Capital		(A: Sep. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	862.434	-	32.794	-	( 35.249	-	max(0, 97.472	-	167.87	+	35.249	))
=	794.391

	Invested Capital		(A: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	782.893	-	17.113	-	( 29.696	-	max(0, 80.561	-	155.728	+	29.696	))
=	736.084

Digi International's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	29.996 * ( 1 - 9.69% )	/	( (714.577	+	716.956)	/ 2 )
=	27.0893876	/	715.7665
=	3.78 %

where

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	759.883	-	16.376	-	( 28.93	-	max(0, 64.598	-	151.652	+	28.93	))
=	714.577

	Invested Capital		(Q: Mar. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	759.276	-	20.429	-	( 21.891	-	max(0, 74.643	-	153.073	+	21.891	))
=	716.956

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Digi International (STU:DGI) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Digi International's WACC % is 9.99%. Digi International's ROC % is 5.81% (calculated using TTM income statement data). Digi International earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Digi International ROC % Related Terms

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Digi International (STU:DGI) Business Description

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DGII:USA

Address

9350 Excelsior Boulevard, Suite 700, Hopkins, MN, USA, 55343

Website

https://www.digi.com

Digi International Inc is a Minnesota corporation. The company provides business and mission-critical and Internet of Things (IoT) connectivity products and services. It has two segments: IoT Products and Services and IoT Solutions. The IoT Products and Services segment consists of distinct communications products and communication product development services. IoT Solutions segment offers wireless temperature and other environmental condition monitoring services as well as employee task management services. The company generates majority of its revenue from the IoT Products & Services segment. Geographically, the company generates majority of its revenue from its business in the United States and also has its presence in Europe, Middle East and Africa and Rest of the world.