Head to Head Analysis: Digi International (NASDAQ:DGII) & NetScout Systems (NASDAQ:NTCT)

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

Valuation and Earnings

This table compares Digi International and NetScout Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Digi International	$418.62 million	2.91	$22.50 million	$1.13	29.13
NetScout Systems	$822.68 million	2.05	-$366.92 million	($5.15)	-4.58

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

Insider and Institutional Ownership

95.9% of Digi International shares are held by institutional investors. Comparatively, 91.6% of NetScout Systems shares are held by institutional investors. 3.3% of Digi International shares are held by insiders. Comparatively, 3.7% of NetScout Systems shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Digi International	10.07%	11.00%	8.02%
NetScout Systems	-44.60%	7.37%	5.16%

Volatility and Risk

Digi International has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, NetScout Systems has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Digi International and NetScout Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Digi International	0	2	1	0	2.33
NetScout Systems	0	1	0	0	2.00

Digi International presently has a consensus price target of $35.67, suggesting a potential upside of 8.34%. NetScout Systems has a consensus price target of $25.00, suggesting a potential upside of 5.98%. Given Digi International’s stronger consensus rating and higher probable upside, analysts clearly believe Digi International is more favorable than NetScout Systems.

Summary

Digi International beats NetScout Systems 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 NetScout Systems

NetScout Systems, Inc. provides service assurance and cybersecurity solutions for protect digital business services against disruptions in the United States, Europe, Asia, and internationally. The company offers nGeniusONE management software that enables customers to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules that enable its customers to analyze and troubleshoot traffic in radio access and Wi-Fi networks. It also provides nGeniusPULSE, an active testing tool that enables enterprises to identify infrastructure performance issues and determine application availability, reliability, and performance; and nGenius Business Analytics solution, which enables service providers to analyze their network traffic. In addition, the company offers ISNG, an advanced passive network probe; packet flow systems that deliver targeted network traffic access to various monitoring and security tools and systems; and a suite of test access points that enable non-disruptive access to network traffic. Further, it provides cybersecurity solutions to protect their networks against distributed denial of service attacks under the Arbor brand, such as Arbor Sightline, Arbor Threat Mitigation System, Arbor Insight, Arbor Edge Defense, and Arbor Cloud. Additionally, the company offers advanced threat detection solutions, such as Omnis Cyber Investigator. It serves enterprise customers in various industries, including financial services, technology, manufacturing, healthcare, utilities, education, transportation, and retail; mobile operators, wireline operators, cable operators, Internet service providers, and cloud providers; and governmental agencies through a direct sales force, and indirect reseller and distribution channels. The company was incorporated in 1984 and is headquartered in Westford, Massachusetts.