Akamai Technologies logged a 8.5% change during today's evening session, and is now trading at a price of $102.99 per share.
Akamai Technologies returned gains of 7.0% last year, with its stock price reaching a high of $107.33 and a low of $70.65. Over the same period, the stock returned a similar cumulative performance to the S&P 500. As of April 2023, the company's 50-day average price was $91.91.
Akamai Technologies, Inc. provides cloud services for securing, delivering, and computing content, applications, and software over the internet in the United States and internationally. Based in Cambridge, MA, the large-cap Consumer Discretionary company has 9,800 full time employees. Akamai Technologies has not offered a dividend during the last year.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2020-02-28 | 2021-02-26 | 2022-02-28 | 2023-02-28 | |
|---|---|---|---|---|
| Revenue (MM) | $2,894 | $3,198 | $3,461 | $3,617 |
| Gross Margins | 65.9% | 64.6% | 63.3% | 61.7% |
| Operating Margins | 19.6% | 21.8% | 22.9% | 19.1% |
| Net Margins | 16.52% | 17.42% | 18.83% | 14.48% |
| Net Income (MM) | $478 | $557 | $652 | $524 |
| Net Interest Expense (MM) | -$15 | -$69 | -$72 | -$11 |
| Depreciation & Amort. (MM) | -$441 | -$478 | -$551 | -$593 |
| Earnings Per Share | $2.9 | $3.37 | $3.95 | $3.09 |
| EPS Growth | n/a | 16.21% | 17.21% | -21.77% |
| Diluted Shares (MM) | 165 | 165 | 165 | 152 |
| Free Cash Flow (MM) | $1,418 | $1,729 | $1,734 | $1,516 |
| Capital Expenditures (MM) | -$360 | -$514 | -$329 | -$241 |
| Net Current Assets (MM) | -$1,117 | -$1,583 | -$1,688 | -$1,974 |
| Current Ratio | 3.22 | 2.54 | 2.43 | 2.41 |
| Long Term Debt (MM) | $1,840 | $1,907 | $1,976 | $2,285 |
Akamai Technologies has strong margins with a stable trend, a steady stream of strong cash flows, and an excellent current ratio. The company also benefits from healthy debt levels, growing revenues and decreasing reinvestment in the business, and wider gross margins than its peer group. However, the firm has EPS growth achieved by reducing the number of outstanding shares.
Akamai Technologies's Valuation Is in Line With Its Sector Averages:
Akamai Technologies has a trailing twelve month P/E ratio of 29.7, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $6.31, the company has a forward P/E ratio of 14.6. Akamai Technologies's PEG ratio is 3.02 on the basis of the 9.9% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Akamai Technologies is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.7 is higher than the sector average of 3.12. The company's shares are currently trading 125.4% above their Graham number. In conclusion, Akamai Technologies's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.
There's an Analyst Consensus of Little Upside Potential for Akamai Technologies:
The 16 analysts following Akamai Technologies have set target prices ranging from $75.0 to $115.0 per share, for an average of $96.18 with a hold rating. As of April 2023, the company is trading -4.4% away from its average target price, indicating that there is an analyst consensus of little upside potential.
Akamai Technologies has an average amount of shares sold short because 6.2% of the company's shares are sold short. Institutions own 94.8% of the company's shares, and the insider ownership rate stands at 1.81%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $1,863,604,320.
