Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Akamai Technologies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.3% to 13.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 32, DIO 60). At a 7.5% WACC with mid-year discounting, the terminal value (93% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $216.54 per share, suggesting AKAM is undervalued by 85.4% at the current price of $116.78.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 911 | 976 | 1,056 | 1,139 | 1,297 | 1,329 |
| (−) Net Interest | 38 | 41 | 44 | 48 | 54 | 56 |
| (+) D&A | 648 | 689 | 759 | 788 | 839 | 860 |
| EBITDA | 1,597 | 1,706 | 1,859 | 1,975 | 2,191 | 2,246 |
| (−) Tax | 152 | 163 | 176 | 190 | 216 | — |
| (−) CapEx | 754 | 808 | 874 | 943 | 1,073 | — |
| (−) ΔWC | 315 | 70 | 86 | 90 | 170 | — |
| Free Cash Flow (FCF) | 376 | 665 | 723 | 752 | 731 | — |
| Peers' EBITDA Multiple | 22.4x | |||||
| Terminal Value | 50,327 | |||||
| WACC / Discount Rate | 7.45% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 363 | 598 | 604 | 585 | 529 | 35,144 |
| Enterprise Value | 37,823 | |||||
| Projection Period | 2,679 | 7.1% | ||||
| Terminal Value | 35,144 | 92.9% | ||||
| (−) Current Net Debt | 5,979 | |||||
| Equity Value | 31,844 | |||||
| (÷) Outstanding Shares | 147M | |||||
| Fair Price | $217 | +85.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.4x | 20.4x | 22.4x | 24.4x | 26.4x |
|---|---|---|---|---|---|
| 5.4% | $194 | $218 | $241 | $264 | $288 |
| 6.4% | $184 | $206 | $228 | $251 | $273 |
| 7.4% | $174 | $195 | $217 | $238 | $259 |
| 8.4% | $165 | $185 | $205 | $226 | $246 |
| 9.4% | $156 | $175 | $195 | $214 | $234 |
Current price: $116.78. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.