Digi International Inc. (NASDAQ:DGII) shareholders are probably feeling a little disappointed, since its shares fell 2.9% to US$31.41 in the week after its latest full-year results. It looks like a credible result overall - although revenues of US$424m were what the analysts expected, Digi International surprised by delivering a (statutory) profit of US$0.61 per share, an impressive 22% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Digi International

Taking into account the latest results, Digi International's four analysts currently expect revenues in 2025 to be US$424.1m, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 47% to US$0.91. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$435.2m and earnings per share (EPS) of US$0.96 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

What's most unexpected is that the consensus price target rose 8.1% to US$38.38, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Digi International analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$32.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Digi International shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Digi International's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.01% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.2% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Digi International.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Digi International. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Digi International. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Digi International analysts - going out to 2027, and you can see them free on our platform here.

It might also be worth considering whether Digi International's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.