Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 38.36% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AKAM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AKAMAI TECHNOLOGIES INC has improved earnings per share by 17.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AKAMAI TECHNOLOGIES INC increased its bottom line by earning $1.07 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.07).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Internet Software & Services industry average. The net income increased by 14.1% when compared to the same quarter one year prior, going from $42.29 million to $48.23 million.
- AKAM's revenue growth trails the industry average of 44.3%. Since the same quarter one year prior, revenues rose by 22.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AKAM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.29, which clearly demonstrates the ability to cover short-term cash needs.
Akamai Technologies, Inc. provides content delivery and cloud infrastructure services for accelerating and improving applications over the Internet in the United States and internationally. Akamai has a market cap of $7 billion and is part of the technology sector and internet industry. The company has a P/E ratio of 36.5, above the S&P 500 P/E ratio of 17.7. Shares are up 22.2% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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