NasdaqGS:AKAM

Stock Analysis Report

Executive Summary

Akamai Technologies, Inc. provides cloud services for delivering, optimizing, and securing content and business applications over the Internet in the United States and internationally.

Rewards

Trading at 15.8% below its fair value

Earnings are forecast to grow 8.98% per year

Earnings grew by 60.2% over the past year

Risk Analysis

Has a high level of debt



Snowflake Analysis

Solid track record with mediocre balance sheet.


Similar Companies

Share Price & News

How has Akamai Technologies's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AKAM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.7%

AKAM

2.1%

US IT

1.5%

US Market


1 Year Return

42.2%

AKAM

37.2%

US IT

20.1%

US Market

Return vs Industry: AKAM exceeded the US IT industry which returned 37.2% over the past year.

Return vs Market: AKAM exceeded the US Market which returned 20.1% over the past year.


Shareholder returns

AKAMIndustryMarket
7 Day3.7%2.1%1.5%
30 Day4.6%4.4%1.4%
90 Day12.7%13.9%8.7%
1 Year42.2%42.2%38.6%37.2%22.7%20.1%
3 Year59.9%59.9%112.3%103.1%50.1%40.5%
5 Year39.2%39.2%148.0%125.8%73.1%54.1%

Price Volatility Vs. Market

How volatile is Akamai Technologies's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Akamai Technologies undervalued compared to its fair value and its price relative to the market?

15.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: AKAM ($99.67) is trading below our estimate of fair value ($118.4)

Significantly Below Fair Value: AKAM is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: AKAM is poor value based on its PE Ratio (33.9x) compared to the IT industry average (33.1x).

PE vs Market: AKAM is poor value based on its PE Ratio (33.9x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: AKAM is poor value based on its PEG Ratio (3.8x)


Price to Book Ratio

PB vs Industry: AKAM is overvalued based on its PB Ratio (4.4x) compared to the US IT industry average (4.3x).


Next Steps

Future Growth

How is Akamai Technologies forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

9.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AKAM's forecast earnings growth (9% per year) is above the savings rate (1.7%).

Earnings vs Market: AKAM's earnings (9% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: AKAM's earnings are forecast to grow, but not significantly.

Revenue vs Market: AKAM's revenue (7.2% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: AKAM's revenue (7.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AKAM's Return on Equity is forecast to be high in 3 years time (20.7%)


Next Steps

Past Performance

How has Akamai Technologies performed over the past 5 years?

2.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AKAM has high quality earnings.

Growing Profit Margin: AKAM's current net profit margins (16.5%) are higher than last year (11%).


Past Earnings Growth Analysis

Earnings Trend: AKAM's earnings have grown by 2.7% per year over the past 5 years.

Accelerating Growth: AKAM's earnings growth over the past year (60.2%) exceeds its 5-year average (2.7% per year).

Earnings vs Industry: AKAM earnings growth over the past year (60.2%) exceeded the IT industry 12%.


Return on Equity

High ROE: AKAM's Return on Equity (13.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Akamai Technologies's financial position?


Financial Position Analysis

Short Term Liabilities: AKAM's short term assets ($2.2B) exceed its short term liabilities ($693.3M).

Long Term Liabilities: AKAM's short term assets ($2.2B) do not cover its long term liabilities ($2.7B).


Debt to Equity History and Analysis

Debt Level: AKAM's debt to equity ratio (50.3%) is considered high.

Reducing Debt: AKAM's debt to equity ratio has increased from 20.5% to 50.3% over the past 5 years.

Debt Coverage: AKAM's debt is well covered by operating cash flow (57.5%).

Interest Coverage: AKAM's interest payments on its debt are well covered by EBIT (38.2x coverage).


Balance Sheet

Inventory Level: AKAM has a high level of physical assets or inventory.

Debt Coverage by Assets: AKAM's debt is covered by short term assets (assets are 1.2x debt).


Next Steps

Dividend

What is Akamai Technologies's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate AKAM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate AKAM's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if AKAM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if AKAM's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of AKAM's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.6yrs

Average management tenure


CEO

Tom Leighton (62yo)

7.1yrs

Tenure

US$11,347,676

Compensation

Dr. F. Thomson Leighton, also known as Tom, co-founded Akamai Technologies, Inc. in 1998 and has been its Chief Executive Officer since January 1, 2013. Dr. Leighton is Akamai's technology visionary and le ...


CEO Compensation Analysis

Compensation vs Market: Tom's total compensation ($USD11.35M) is about average for companies of similar size in the US market ($USD10.81M).

Compensation vs Earnings: Tom's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
F. Leighton
Co-Founder7.1yrsUS$11.35m1.7% $273.1m
Rick McConnell
President & GM of Web Division3.8yrsUS$5.82m0.018% $2.8m
Robert Blumofe
Executive VP of Platform & GM of Enterprise Division12.1yrsUS$4.12m0.012% $2.0m
Adam Karon
Executive VP and GM of Media & Carrier Divisions2.9yrsUS$3.29m0.0096% $1.5m
Edward McGowan
Executive VP & CFO0.9yrsno data0.0082% $1.3m
Keith Oslakovic
Senior Vice President of Global Performance & Operations1.1yrsno datano data
Mani Sundaram
Executive VP of Global Services & Support and Chief Information Officer1.3yrsno datano data
Tom Barth
Head of Investor Relations6.4yrsno datano data
Aaron Ahola
Executive VP2.3yrsno data0.0025% $409.1k
Kim Salem Jackson
Senior Vice President of Global Marketing & Corporate Communications0.3yrsno datano data

2.6yrs

Average Tenure

53yo

Average Age

Experienced Management: AKAM's management team is considered experienced (2.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
F. Leighton
Co-Founder7.1yrsUS$11.35m1.7% $273.1m
Bernardus Verwaayen
Independent Director6.3yrsUS$324.95kno data
Monte Ford
Independent Director6.7yrsUS$299.96k0.012% $1.9m
Jonathan Miller
Independent Director4.6yrsUS$299.96k0.011% $1.8m
Frederic Salerno
Independent Chairman of the Board1.9yrsUS$359.98k0.011% $1.8m
Daniel Hesse
Independent Director3.5yrsUS$299.96k0.0048% $766.7k
William Wagner
Independent Director1.8yrsUS$224.96k0.0030% $481.6k
Jill Greenthal
Independent Director12.3yrsUS$309.98k0.024% $3.8m
Madhu Ranganathan
Director0.7yrsno datano data
Peter Killalea
Independent Director1.9yrsUS$224.96k0.0030% $481.6k

4.0yrs

Average Tenure

62yo

Average Age

Experienced Board: AKAM's board of directors are considered experienced (4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Akamai Technologies, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Akamai Technologies, Inc.
  • Ticker: AKAM
  • Exchange: NasdaqGS
  • Founded: 1998
  • Industry: Internet Services and Infrastructure
  • Sector: Software
  • Market Cap: US$16.107b
  • Shares outstanding: 161.60m
  • Website: https://www.akamai.com

Number of Employees


Location

  • Akamai Technologies, Inc.
  • Kendall Square
  • 145 Broadway
  • Cambridge
  • Massachusetts
  • 2142
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AKAMNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDOct 1999
AK3DB (Deutsche Boerse AG)YesCommon SharesDEEUROct 1999
AK3XTRA (XETRA Trading Platform)YesCommon SharesDEEUROct 1999
AKAMWBAG (Wiener Boerse AG)YesCommon SharesATEUROct 1999
0HBQLSE (London Stock Exchange)YesCommon SharesGBUSDOct 1999
AK3ETLX (Eurotlx)YesCommon SharesITEUROct 1999
A1KA34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 2 REPR 1 SHS UNSPONBRBRLJan 2020

Biography

Akamai Technologies, Inc. provides cloud services for delivering, optimizing, and securing content and business applications over the Internet in the United States and internationally. It provides cloud security solutions, including Web Application Protector to safeguard Web assets from Web application and distributed denial of service; Kona Site Defender, a cloud security solution; Bot Manager to identify bots and categorize bots based on business or IT impact; Fast DNS, which translates human-readable domain names into numerical IP addresses; Prolexic Routed to protect Web- and IP-based applications; and Client Reputation that assigns risk scores to malicious IP address and enables customers to take action on individual clients. The company also offers enterprise security solutions, including Enterprise Application Access that enables remote access to applications; and Enterprise Threat Protector to enable enterprise security teams to identify, block, and mitigate targeted attacks. In addition, the company provides Web and mobile performance solutions, such as Ion, a suite of intelligent performance optimization tools and controls; Dynamic Site Accelerator to accelerate and secure interactive Websites; Image Manager that automatically optimizes online images; CloudTest to conduct load testing and other analysis of Websites in a pre-production environment; and mPulse that provides real-time Website performance data to provide insight about end-user experiences on a Website. Further, it provides carrier solutions, including Aura Managed CDN, intelligent recursive DNS platforms, and security and personalization services; and media delivery solutions, such as adaptive delivery, download delivery, media services live, and media analytics, as well as NetStorage, a cloud storage solution. The company sells its solutions through direct sales and service organization; and channel partners. The company was founded in 1998 and is headquartered in Cambridge, Massachusetts. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 23:43
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.