Is Akamai Oversold?

With shares of Akamai Technologies (NASDAQ:AKAM) trading at around $35.26, is AKAM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Akamai was recently slammed after missing on the top line and offering weak guidance, but are investors overreacting to this news? Let’s cover the basics first. Q4 revenue came in at $378 million versus a consensus of $381.4 million. That’s the bad news when it comes to revenue. The good news is that this was still a 17 percent increase year-over-year. Q4 EPS came in at $0.38, which was a moderate improvement over the $0.33 we saw for the quarter last year. FY2012 revenue came in at $1.37 billion, which was yet another improvement. FY2012 EPS was $1.12. You guessed it — another improvement.

Missing expectations hurt the stock, but weak guidance was the ultimate culprit. Akamai expects Q1 revenue to come in between $352 million and $362 million. This was below Wall Street expectations of $369.8 million. However, this would still be a significant improvement year-over-year.

There’s a lot of talk about weakening demand and competitor margins increasing, but Akamai is still the strongest player in this space.

Let’s take a look at some important numbers prior to forming an opinion on this stock…