When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. But Akamai Technologies, Inc. (NASDAQ:AKAM) has fallen short of that second goal, with a share price rise of 84% over five years, which is below the market return. Zooming in, the stock is actually down 4.0% in the last year.
See our latest analysis for Akamai Technologies
Over half a decade, Akamai Technologies managed to grow its earnings per share at 14% a year. So the EPS growth rate is rather close to the annualized share price gain of 13% per year. This indicates that investor sentiment towards the company has not changed a great deal. In fact, the share price seems to largely reflect the EPS growth.
We know that Akamai Technologies has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
While the broader market gained around 29% in the last year, Akamai Technologies shareholders lost 4.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 13% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Akamai Technologies you should know about.
But note: Akamai Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).