Akamai Technologies (AKAM:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Akamai Technologies(AKAM:NAS)

Technology:Software – Infrastructure

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$111.47 (USD) 09/25/2020

Weighted Valuation
$103.19 (USD)

Overall Rating
Overvalued by 7.4%

Valuation Models Comparables: $95.44 (USD)
(in order of importance) Adjusted Book Value: $87.75 (USD)
Multiples: $92.77 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $113.50 this stock is Fairly valued

Company Overview (AKAM:NAS USD)

Price 111.47
Range 110.31 – 111.73
52 week 80.05 – 119.57
Open 110.80
Vol / Avg. 1.14M/1.61M
Mkt cap 18.14B
P/E 33.78
Div/yield 0.00/0.00
EPS 2.90
Shares 162.7M
Beta 0.30

Company Description

Akamai operates a content delivery network, or CDN, 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 200,000 servers distributed over thousands of points of presence within over 1,700 networks across 130 countries. Its customers generally include media companies, which stream video content or make video games available for download, and other enterprises that run interactive or high-traffic websites, such as e-commerce firms and financial institutions. Akamai also has a significant security business, which is integrated with its core web and media businesses to protect its customers from cyber threats.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for AKAM:NAS

Using a discounted cash flow model we generated an intrinsic value of $204.55 (USD) for AKAM:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

AKAM:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $204.55 1% 5% 1% 5%
WACC (or Ke) 3.37 $293.88 $156.16
Terminal Growth Rate 0.00 $159.04 $288.52
Tax Rate 0.10 $216.58 $192.53
Cash Flow 1,559,500,000 $191.87 $217.24
Capital Expenditures -264,809,400 $202.55 $206.55
Long Term Debt 634,504,000 $204.75 $204.36

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $95.44 (USD) for AKAM:NAS. We also generated a valuation of $102.58 (USD) using other metrics and comparables.
The comparable companies were Euronet Worldwide (EEFT:NAS), F5 Networks (FFIV:NAS), VeriSign (VRSN:NAS), NortonLifeLock (NLOK:NAS) and Synopsys (SNPS:NAS).

Company AKAM:NAS End Date Value
Earnings/Share $3.30 (USD)
Book Value/Share $24.00 (USD)
Sales/Share $18.52 (USD)
Cash Flow/Share $6.71 (USD)
EBITDA/Share $6.23 (USD)
Price Based on Comps Adjustment Factor (%)
$107.38 (USD) -32.8
$112.55 (USD) -42.0
$144.21 (USD) 0.6
$118.58 (USD) -23.1
$131.63 (USD) -21.0
33.78 PE Ratio 32.54 38.77 22.51 30.46 19.35 51.61
4.65 PB Ratio 4.69 3.78 3.41 0.00 0.00 6.88
6.02 PS Ratio 7.79 1.84 3.15 19.33 5.42 9.21
16.62 PCF Ratio 20.11 7.61 10.60 30.21 0.00 32.01
17.55 EV to EBITDA 21.14 13.60 13.86 26.97 11.82 39.46


Using a multiples approach we generated a valuation of  $92.77 (USD) for AKAM:NAS

Company AKAM:NAS End Date Value
Earnings/Share $3.30 (USD)
Book Value/Share $24.00 (USD)
Sales/Share $18.52 (USD)
Cash Flow/Share $6.71 (USD)
EBITDA/Share $6.23 (USD)
Price Based on Comps Adjustment Factor
$112.99 (USD) 0
$85.30 (USD) 0
$88.13 (USD) 0
$89.38 (USD) 0
$88.08 (USD) 0
Ratios Ratio Average
PE Ratio 34.24
PB Ratio 3.55
PS Ratio 4.76
PCF Ratio 13.33
EV to EBITDA 14.15

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  AKAM:NAS for the last 10 years was  3.64

We ran the Adjusted Book Value for  AKAM:NAS and generated a book value of  $24.10 (USD)
By multiplying these we get an adjusted valuation of  $87.75 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for AKAM:NAS. The 4 analysts have a concensus valuation for AKAM:NAS for 2021 of $113.50 (USD).

AKAM:NAS Akamai Technologies

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 2 1 3.4000 Hold 2020-9-24

Current Price: 111.47 USD

Analyst Consensus
USD Millions 2020 2021 2022
Mean EPS 5.02 5.49 5.81
# EPS Analysts 5 4 2
Mean Revenue 3,173.40 3,384.00 3,524.90
# Revenue Analysts 5 4 2
Mean Target Price 113.50
Mean Cash Flow 7.50 7.90 8.41
Mean EBITDA 1,306.00 1,344.00 1,559.50
Mean Net Income 840.00 898.00 957.80
Mean Debt Outstanding -21.50 -454.20 -1,000.50
Mean Tax Rate 15.40 15.00 15.00
Mean Growth Rate 11.82
Mean Capital Expenditure 718.70 578.90 463.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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