company background image
ANET

Arista Networks NYSE:ANET Stock Report

Last Price

US$112.89

Market Cap

US$34.4b

7D

2.7%

1Y

28.8%

Updated

30 Sep, 2022

Data

Company Financials +
ANET fundamental analysis
Snowflake Score
Valuation2/6
Future Growth3/6
Past Performance5/6
Financial Health6/6
Dividends0/6

ANET Stock Overview

Arista Networks, Inc. develops, markets, and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.

Arista Networks, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Arista Networks
Historical stock prices
Current Share PriceUS$112.89
52 Week HighUS$148.57
52 Week LowUS$85.18
Beta1.33
1 Month Change-5.83%
3 Month Change20.85%
1 Year Change28.84%
3 Year Change97.56%
5 Year Change134.05%
Change since IPO721.02%

Recent News & Updates

Sep 25

Arista: Valuation Is The Main Issue

Summary Shares of Arista have remained buoyant relative to other tech stocks this year, thanks to its strong results. In its most recent quarter, Arista saw 49% y/y revenue growth, driven by strong performance in its cloud titans vertical. Irregular spending patterns, however, could mean that Q2 saw a pull-in of revenue from future quarters. Arista trades at a ~24x forward P/E multiple, which stands out as quite rich in the current market. The market has hit year-to-date lows. Interest rate spikes and fears of a global recession have put investors on edge and into "risk-off" mode; but now is a great time for intrepid investors to be bargain-hunting. Conversely, there are many stocks in the growth/tech sector that have performed relatively well this year that should be considered for a rotation out of the portfolio on account of rising relative valuations. Arista Networks (ANET) sits in this bucket. This networking hardware company, one of the main rivals to legacy incumbent Cisco (CSCO), has held up much better relative to tech peers this year. Down only roughly 20% year to date, Arista has enjoyed relatively strong fundamental performance during a time that many companies have reported slowing enterprise spend trends. Data by YCharts I'd advise caution on Arista, however. While I agree that the company retains a best-in-class product portfolio that continues to grow rapidly and take share from Cisco every quarter, and that Arista's 60%+ pro forma gross margins mark the company as a rarity among hardware vendors, there are a number of downside factors that investors should consider. The first is valuation. At current share prices near $110, Arista already trades at a 24.0x forward P/E ratio relative to Wall Street's FY23 EPS consensus of $4.59 (which, by the way, represents 14% y/y earnings growth. That's not bad, but that strength is already factored into a mid-20s P/E multiple). Right now, many stocks are trading incredibly cheaply - I'd advise investors to look carefully at the small/mid-cap software sector for many high-quality names that are trading at multi-year lows and historic low valuations. Some names I particularly like right now include Okta (OKTA), Palantir (PLTR), and Coupa (COUP). The second is - how much of Arista's current growth momentum is sustainable? Yes, Arista saw impressive 49% y/y revenue growth in Q2 (which we'll discuss in more detail in the next section), both beating Wall Street's expectations by a wide mile and accelerating sharply over Q1. But with hardware, business is lumpy. Especially because Arista relies on a core set of high-spending "cloud titan" customers, one quarter of strong revenue may mean the order book may be thinner in future quarters. We note as well that Arista completed a number of tuck-in acquisitions in Q2 without disclosing organic growth, so there's some amount of inorganic lift being factored in. All in all, I don't doubt that Arista remains a solid company with a share-gaining product, rich margins, and expanding earnings - but with the stock market at YTD lows, there are just far better bargains to be had than Arista. Keep adopting a "watch and wait" stance here. I'd buy Arista in a heartbeat if its P/E multiple sank to 18x FY23 EPS, implying a price target of $83 (25% downside from current levels). Until Arista starts sinking downward again, stay on the sidelines. Q2 download Let's now go through Arista's latest Q2 results in greater detail. The Q2 earnings summary is shown below: Arista Q2 results (Arista Q2 earnings release) Arista's revenue in the second quarter grew 49% y/y to $1.05 billion. This was the first time that the company crossed the $1 billion revenue mark in a single quarter, and it beat Wall Street's expectations of $980.0 million (+39% y/y) by a significant ten-point margin. Revenue growth also accelerated from 39% y/y growth in Q1. The company noted that strong purchases from cloud titans remained the key driver in Q2 results. Anshul Sadana, the company's COO, gave the following commentary during the Q2 earnings call on the company's deepening relationships with its two main customers, Microsoft (MSFT) and Meta (META), who are each expected to contribute more than 10% to this year's revenue: As we disclosed in previous calls, Microsoft and Meta are very special customers and expected to each be over 10% of our revenue for the full year. At Microsoft, we are deployed in all layers of their network, from the leaf switches at the top of rack to data center spine and regional spine to WAN and cloud edge layers across the globe. We have partnered together to create the DCI layer with encryption and long-reach pluggable optics, which has now become a gold standard in the industry. Microsoft deploys our products, both with SONiC and EOS, and the engineering partnership to codevelop the next-gen network is stronger than ever. Our newer 400-gig products are deployed in production, and we continue to receive very positive feedback about our quality and execution and continue to be the preferred supplier for Azure. We have also had a strong partnership with Meta and have been involved with their network design since the early days. We have codeveloped multiple generations of products with them, including the latest 25.6-terabit 7388 platform with unmatched power efficiency and time-to-market advantages. We have deployed in their colorful cluster fabrics with parallel planes. We’ve also deployed in several use cases, including Meta’s backbone layers, where there is a constant need for higher-speed networks."

Sep 19
Shareholders Are Optimistic That Arista Networks (NYSE:ANET) Will Multiply In Value

Shareholders Are Optimistic That Arista Networks (NYSE:ANET) Will Multiply In Value

There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a...

Sep 05
Here's Why We Think Arista Networks (NYSE:ANET) Might Deserve Your Attention Today

Here's Why We Think Arista Networks (NYSE:ANET) Might Deserve Your Attention Today

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even...

Aug 24

Arista Networks shares set at hold in new Deutsche Bank rating

Deutsche Bank analyst Matthew Niknam initiated his coverage of Arista Networks (NYSE:ANET) on Wednesday with rating on hold, and said the networking technology company stands to expand its market share in the data center market. Niknam said Arista (ANET), which competes with the likes of Cisco Systems (CSCO) and Juniper Networks (JNPR) is in a position to build its business in the areas of data center switching, cloud networks and software and services. Additionally, Niknam said that such opportunities should help Arista's (ANET) revenue nearly double from $2.9B in 2021 to $5.7B in 2025. Niknam also set a $135-a-share price target on Arista's (ANET) stock. Wall Street analysts have a consensus buy rating on Arista's (ANET) shares, while Seeking Alpha authors give the company's shares a hold rating. Meanwhile, Seeking Alpha's quant system, which typically outperforms the stock market, gives Arista's (ANET) shares a strong buy rating.

Aug 22
Is There An Opportunity With Arista Networks, Inc.'s (NYSE:ANET) 26% Undervaluation?

Is There An Opportunity With Arista Networks, Inc.'s (NYSE:ANET) 26% Undervaluation?

Does the August share price for Arista Networks, Inc. ( NYSE:ANET ) reflect what it's really worth? Today, we will...

Shareholder Returns

ANETUS CommunicationsUS Market
7D2.7%-0.4%-2.5%
1Y28.8%-20.9%-23.2%

Return vs Industry: ANET exceeded the US Communications industry which returned -18.8% over the past year.

Return vs Market: ANET exceeded the US Market which returned -21.5% over the past year.

Price Volatility

Is ANET's price volatile compared to industry and market?
ANET volatility
ANET Average Weekly Movement5.2%
Communications Industry Average Movement7.2%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.8%

Stable Share Price: ANET is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: ANET's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20042,993Jayshree Ullalhttps://www.arista.com

Arista Networks, Inc. develops, markets, and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company’s cloud networking solutions consist of extensible operating systems, a set of network applications, as well as gigabit Ethernet switching and routing platforms. It also provides post contract customer support services, such as technical support, hardware repair and parts replacement beyond standard warranty, bug fix, patch, and upgrade services.

Arista Networks, Inc. Fundamentals Summary

How do Arista Networks's earnings and revenue compare to its market cap?
ANET fundamental statistics
Market CapUS$34.35b
Earnings (TTM)US$1.03b
Revenue (TTM)US$3.50b

33.2x

P/E Ratio

9.8x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
ANET income statement (TTM)
RevenueUS$3.50b
Cost of RevenueUS$1.30b
Gross ProfitUS$2.20b
Other ExpensesUS$1.16b
EarningsUS$1.03b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.40
Gross Margin62.77%
Net Profit Margin29.55%
Debt/Equity Ratio0%

How did ANET perform over the long term?

See historical performance and comparison