Akamai Technologies Inc (AKAM, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $94.47, Akamai Technologies Inc has witnessed a daily loss of 0.18%, marked against a three-month change of -7.06%. A thorough analysis, underlined by the GF Score, suggests that Akamai Technologies Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 10/10
- Momentum rank: 5/10
Each one of these components is ranked and the ranks also have a positive correlation with the long-term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Akamai Technologies Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Company Overview: Akamai Technologies Inc
Akamai Technologies Inc operates a content delivery network, which entails locating servers at the edges of networks so its customers, which store content on Akamai servers, can reach their own customers faster, more securely, and with better quality. Akamai has over 325,000 servers distributed over 4,100 points of presence in more than 1,000 cities worldwide. The firm also offers security and cloud computing for its customers, and those businesses have grown to be bigger than the legacy CDN. With a market cap of $14.19 billion and sales amounting to $3.97 billion, Akamai Technologies Inc maintains an operating margin of 16.69%, reflecting its efficient business operations.
Financial Strength: A Resilient Balance Sheet
According to the Financial Strength rating, Akamai Technologies Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Akamai Technologies Inc stands impressively at 24.31, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
Profitability: A Strong Competitive Edge
The Profitability Rank shows Akamai Technologies Inc's impressive standing among its peers in generating profit. Akamai Technologies Inc's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth: Commitment to Expansion
Ranked highly in Growth, Akamai Technologies Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 8.2%, which outperforms worse than 54.12% of 2,487 companies in the Software industry. Moreover, Akamai Technologies Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 4.3, and the rate over the past five years is 10. This trend accentuates the company's continued capability to drive growth.
Conclusion: A Promising Future for Akamai Technologies Inc
With its strong financial strength, impressive profitability, and robust growth metrics, Akamai Technologies Inc is well-positioned for potential outperformance. The high GF Score highlights the firm's unparalleled position in the market, making it an attractive option for value investors. As the company continues to innovate and expand its services, it remains a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
