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Should You Think About Buying Arista Networks, Inc. (NYSE:ANET) Now?
Let's talk about the popular Arista Networks, Inc. (NYSE:ANET). The company's shares received a lot of attention from a substantial price increase on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stockâs share price. But what if there is still an opportunity to buy? Letâs examine Arista Networksâs valuation and outlook in more detail to determine if thereâs still a bargain opportunity.
View our latest analysis for Arista Networks
What Is Arista Networks Worth?
The stock seems fairly valued at the moment according to our valuation model. Itâs trading around 15.15% above our intrinsic value, which means if you buy Arista Networks today, youâd be paying a relatively fair price for it. And if you believe that the stock is really worth $206.92, then there isnât really any room for the share price grow beyond what itâs currently trading. Although, there may be an opportunity to buy in the future. This is because Arista Networksâs beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the companyâs shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Arista Networks look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so letâs also take a look at the company's future expectations. With profit expected to grow by 35% over the next couple of years, the future seems bright for Arista Networks. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? ANETâs optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we havenât considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If youâve been keeping tabs on ANET, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means itâs worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Arista Networks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:ANET
Arista Networks
Engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for data center, campus, and routing environments in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.
Outstanding track record with flawless balance sheet.