Akamai Technologies: Stable And Predictable Fundamentals Fuel Consistent Growth

Summary

• Recurring revenue and subscription-based business model provide stability and predictability.
• The net profit margin has remained positive for nearly two decades with an average ROE of 15% per year.
• Future capital gains likely to stem from intrinsic growth rather than expansion of earnings multiple due to the company already being valued at a fair price.
• It seems that the company is trading at a fair valuation, as it is near a standard valuation multiple of 15, but slightly below its average earnings per share multiple of 20.

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Introduction

Akamai Technologies (NASDAQ:AKAM) shows impressive characteristics, including steady growth, a manageable level of net debt, and a well-considered approach to capital allocation. Strong financial fundamentals, such as those found in Akamai Technologies, are not frequently seen in undervalued companies. These financials typically prevent a stock

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.