Akamai Technologies Set for EPS Decline Amid Revenue Growth

Akamai Technologies is poised to report earnings of $1.59, representing a slight decline. However, a revenue growth projection of 3.62% may assure investors. The upcoming earnings release has the market's attention as analysts revise estimates, reflecting a cautiously optimistic outlook.

Date: 27-09-2024

AI Rating: 5

Akamai Technologies (AKAM) has recently closed at $100.11, reflecting a slight increase of +0.47%. However, the company's performance over the past month has been less than favorable, with a decline of 0.44% compared to gains across the sector and broader indices.

The focus now turns to Akamai's upcoming earnings performance. The anticipated EPS of $1.59 shows a decline of 2.45% year-over-year, which could signal concerns among investors regarding the company's profit generation capabilities. Despite the expected dip in EPS, the revenue projection of $1 billion suggests a positive trend, indicating a 3.62% increase from the previous year. This combination of declining earnings and increasing revenue presents a mixed outlook, which investors must assess carefully.

For the complete fiscal year, projected earnings per share are set at $6.43, which represents an increase of 3.71%, accompanied by a revenue increase of 4.84%. While these figures suggest some growth, the expected drop in quarterly earnings could raise alarm bells regarding the company's near-term profitability.

Moreover, recent changes in analyst estimates for the company are critical. A 0.26% increase in the consensus EPS projection within the last 30 days suggests a slightly more favorable outlook from analysts. However, Akamai's Zacks Rank of #3 indicates a 'Hold' status, which reflects uncertainty in the stock's short-term direction.

From a valuation perspective, Akamai's Forward P/E ratio of 15.51 indicates that it is trading at a discount compared to its industry average of 30.63. Nevertheless, the PEG ratio of 2.2 reveals that the stock may not be undervalued when considering its expected earnings growth rate.

The Internet - Services industry, of which Akamai is a part, currently ranks within the bottom 46% of all industries, which may dampen investor enthusiasm. Given this context, Akamai's performance may be closely scrutinized by investors seeking to gauge its operational health.

Stocks: AKAM