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Akamai Technologies (AKAM) Q2 Earnings: What's in Store? (Revised)

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Akamai Technologies, Inc. (AKAM - Free Report) is set to report second-quarter 2016 results on Jul 26, after market close. The company reported a positive earnings surprise of 1.96% in the last quarter. It has also delivered an average positive earnings surprise of 4.05% over the trailing four quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Akamai is likely to benefit from the rising demand for cloud infrastructure solutions, security, mobile products and online video. This apart, the other positive factors for the company include increasing mobile data traffic and demand for wireless broadband, and growth in performance-driven advertising. Akamai is also likely to benefit from its strong foothold in the web applications domain. Additionally, the company has been re-evaluating its growth strategy, which is also a positive.

However, the setbacks in the company’s media delivery business can pose some concerns. In addition, the over-the-top (OTT) video market has been sluggish of late. Even though consumers continue to shift from traditional videos to OTT, the rate of conversion is lower than expected.

For the second quarter of 2016, Akamai expects revenues in the range of $566 million to $582 million. Non-GAAP earnings per share are projected in the range of 62 cents to 65 cents.

Earnings Whispers

Our proven model does not conclusively show that Akamai is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Akamai has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 50 cents.

Zacks Rank: Akamai carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

AKAMAI TECH Price and EPS Surprise

AKAMAI TECH Price and EPS Surprise | AKAMAI TECH Quote

Stocks to Consider

Here are a few stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

General Dynamics Corp. (GD - Free Report) has an earnings ESP of +2.17% and a Zacks Rank #2.

CBS Corp has an earnings ESP of +1.16% and a Zacks Rank #2.

Spectra Energy Corp. (SE - Free Report) has an earnings ESP of +16.00% and a Zacks Rank #2.

(We are reissuing this article to correct a mistake. The original article, issued on July 21, 2016, should no longer be relied upon.)

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