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Last update on 2024-06-07

Akamai Technologies (AKAM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Detailed Piotroski F-Score analysis for Akamai Technologies (AKAM) in 2023. Assessing profitability, liquidity, and operational efficiency with a final score of 4/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Akamai Technologies (AKAM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Akamai Technologies (AKAM) was analyzed using the Piotroski F-Score system, which assesses a company's financial strength based on 9 criteria covering profitability, liquidity, and operating efficiency. Akamai scored a 4 out of 9. Here's a quick breakdown: 1. **Profitability**: - Positive net income: Yes - Positive cash flow from operations: Yes - Return on Assets (ROA) is growing: No - Operating cash flow higher than net income: Yes 2. **Liquidity**: - Leverage is declining: No - Current ratio is growing: No - Number of shares not diluted: Yes 3. **Operating Efficiency**: - Gross margin is growing: No - Asset turnover ratio is growing: No Akamai is showing solid profitability and strong cash flow but falters on measures like ROA, leverage, current ratio, and operational efficiency.

Insights for Value Investors Seeking Stable Income

With a Piotroski score of 4, Akamai Technologies shows potential but exhibits several areas of concern, especially in terms of asset utilization and increasing debt levels. Investors should approach with caution. While the company has strong profitability and cash flow, its declining efficiency metrics and rising leverage might pose risks. It might be worth further investigation for its strong points, but only for those with a higher tolerance for risk or a more in-depth strategy for evaluating these weaknesses.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Akamai Technologies (AKAM)

Company has a positive net income?

Net income evaluates the profitability of a company and is important for determining financial health.

Historical Net Income of Akamai Technologies (AKAM)

In 2023, Akamai Technologies (AKAM) recorded a net income of $547,629,000, which is positive. This is crucial as it demonstrates the company's profitability for the year. Over the past 20 years, the net income shows an overall positive trend, with notable year-on-year increases, especially from 2019 to 2021. The consistent profitability and upward trajectory indicate strong financial health and operating efficiency, warranting a positive assessment for this criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates whether a company is generating sufficient cash from its core operations, which is essential for sustaining and growing the business.

Historical Operating Cash Flow of Akamai Technologies (AKAM)

For Akamai Technologies in 2023, the CFO is positive at $1,348,439,000. This positive trend continues a general pattern over the past 20 years, where the company consistently demonstrates robust organic cash generation. Notably, the company has improved its CFO from a negative value in 2003 to over $1.3 billion in 2023, reflecting strong operational performance. Consequently, this criterion scores 1 point, indicating healthy cash generation from core operations and a positive trend for operational sustainability.

Return on Assets (ROA) are growing?

Change in ROA measures how efficiently a company is utilizing its assets to generate earnings. It reflects managerial effectiveness.

Historical change in Return on Assets (ROA) of Akamai Technologies (AKAM)

The Return on Assets (ROA) for Akamai Technologies in 2023 was 0.0602, which decreased from 0.0631 in 2022. This decline in ROA indicates that the company has become less efficient at converting its investments in assets into profitable earnings. Despite the robust operating cash flow over the years, the decrease in ROA this year is notable. When compared to the industry median, which was 0.715 in 2023, Akamai’s ROA significantly lags behind industry norms. This criterion, therefore, scores a 0, suggesting room for improvement in asset efficiency. As per the historical data, Akamai's highest ROA was substantially behind the industry's highest medians, emphasizing a consistent lag in optimizing asset returns. This trend needs careful monitoring and strategic adjustments to enhance operational efficiency.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income for Akamai Technologies (AKAM) in 2023 and why it is important to consider

Historical accruals of Akamai Technologies (AKAM)

For the year 2023, Akamai Technologies reported an Operating Cash Flow of $1,348,439,000 compared to a Net Income of $547,629,000. Since the Operating Cash Flow is significantly higher than the Net Income, it passes this criterion and should be awarded 1 point. This trend is positive because it suggests that the company generates more cash from its operations than what is reported as net income, indicating strong cash-generating abilities and potentially conservative accounting practices. Analyzing the trend over the past 20 years, from a negative operating cash flow of -$18,001,000 in 2003 to the current $1,348,439,000, shows consistent improvement. Similarly, the net income has shown a lesser but steady growth from -$29,281,000 in 2003 to $547,629,000 in 2023. These trends indicate increasing operational efficiency and profitability.

Liquidity of Akamai Technologies (AKAM)

Leverage is declining?

Change in leverage measures a company's ability to handle its debt. A decrease is seen favorably as it suggests improved financial stability.

Historical leverage of Akamai Technologies (AKAM)

In the case of Akamai Technologies (AKAM), the leverage increased from 0.3587 in 2022 to 0.4357 in 2023. This rise in leverage implies that the company has taken on more debt relative to its equity. Over the last 20 years, Akamai's leverage has generally been low and controlled, with notable increases only in recent years. An increase in leverage suggests a higher financial risk, potentially indicating a more aggressive capital structure or a strategic decision to finance growth. However, it also calls for caution as higher debt levels can impact the company's financial flexibility and increase interest expenses.

Current Ratio is growing?

The current ratio is a financial metric that measures a company's ability to pay short-term obligations with its short-term assets.

Historical Current Ratio of Akamai Technologies (AKAM)

In 2022, Akamai Technologies had a current ratio of 2.4052, which fell to 2.1588 in 2023. This indicates a decrease in the current ratio and reflects a decline in the firm's liquidity. Evaluating its long-term trend, the current ratio has consistently remained above the industry median. Despite the drop this year, Akamai might still manage short-term obligations adequately, due to its historical strength in maintaining a higher ratio than its industry peers. However, for the Piotroski score calculation, this would add 0 points as the current ratio did not increase in 2023.

Number of shares not diluted?

Change in Shares Outstanding indicates whether a company has issued more stock or repurchased shares. Share buybacks can indicate confidence in the company’s potential.

Historical outstanding shares of Akamai Technologies (AKAM)

Comparing Akamai Technologies' outstanding shares, we see a decline from 159,089,000 in 2022 to 152,510,000 in 2023. This implies a repurchase of shares, thus adding 1 point for this criterion. Over the last 20 years, a general decline in outstanding shares can be observed, particularly evident with drops in recent years, showcasing a sustained strategy of buybacks by the company.

Operating of Akamai Technologies (AKAM)

Cross Margin is growing?

The change in gross margin criterion assesses whether the gross margin has improved year-over-year. A higher gross margin indicates better operational efficiency, crucial for profitability.

Historical gross margin of Akamai Technologies (AKAM)

The gross margin for Akamai Technologies (AKAM) decreased from 0.6174 in 2022 to 0.6036 in 2023. This represents a decline in operational efficiency, garnering a score of 0 under the Piotroski criterion. Over the past 20 years, the gross margin has seen various fluctuations, peaking at 0.8034 in 2005 and trending downwards in recent years. Comparatively, the industry median gross margin in 2023 stands at 0.715, higher than that of Akamai. This downward trend could be concerning; adherence to the industry average remains crucial.

Asset Turnover Ratio is growing?

Assessing a company's asset turnover ratio, which indicates how effectively it is utilizing its assets to generate revenue, is crucial for making informed investment decisions.

Historical asset turnover ratio of Akamai Technologies (AKAM)

The Asset Turnover for Akamai Technologies has decreased from 0.436 in 2022 to 0.4188 in 2023. This reduction signifies a decline in efficiency in utilizing its assets to produce revenue. Looking at the trend over the last 20 years, Akamai's asset turnover has seen substantial fluctuations, with the highest ratio being 0.9098 in 2004 and the lowest in recent years. Given that 2023's asset turnover is one of the lowest in the 20-year spectrum, this is concerning. Therefore, the result is a 0 for this criterion.


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