Akamai Technologies provides cloud services for delivering, optimizing, and securing online content and business applications in the United States and internationally. The company was founded in 1998 and is based in Cambridge, Massachusetts.
AKAM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Akamai Technologies Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Akamai Technologies Inc ranked in the 23th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 66.83%. As for the metrics that stood out in our discounted cash flow analysis of Akamai Technologies Inc, consider:
AKAM's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 32.98% of tickers in our DCF set.
Akamai Technologies Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 10.87. This coverage rate is greater than that of 78.55% of stocks we're observing for the purpose of forecasting via discounted cash flows.
The weighted average cost of capital for the company is 8. This value is greater than just 19.17% stocks in the Technology sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as AKAM, try AZPN, EVOL, ITRI, BLKB, and FICO.
Looking at Q2, Akamai Technologies (NASDAQ: AKAM) earned $138.06 million, a 6.66% increase from the preceding quarter. Akamai Technologies also posted a total of $794.72 million in sales, a 3.98% increase since Q1. Akamai Technologies earned $129.44 million and sales totaled $764.30 million in Q1.Why ROCE Is Significant Changes in earnings and sales indicate shifts in Akamai Technologies's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, Akamai Technologies posted an ROCE of 0.1%.View more earnings on AKAMIt is important to keep in mind ROCE evaluates past performance and is not us...