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Arista Networks Inc ANET

Morningstar Rating
$273.17 +1.26 (0.46%)
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Company Report

Arista Earnings: We Raise Our Long-Term Growth Forecast and Valuation, but Shares Remain Overpriced

We raise our fair value estimate for Arista Networks to $195 per share from $160, behind our higher forecast for the firm’s long-term growth. Specifically, we have raised our growth expectations for the overall high-speed data center switching market, due mostly to surging artificial intelligence investments. We believe Arista will capture a rising share of this rapidly growing market as it boasts unmatched performance in our view, which also contributes to our wide moat rating. Arista’s good fourth-quarter results and first-quarter guidance align with our updated growth forecast, as does its goal of midteens revenue growth through 2027. The market saw first-quarter guidance as conservative in light of Arista’s opportunity for high-speed AI switching, causing a 6% selloff afterhours. We continue to believe expectations priced into Arista stock are lofty, and we still see shares as overvalued against our new valuation, even after trading down.

Price vs Fair Value

ANET is trading at a 40% premium.
Price
$273.17
Fair Value
$535.00
Uncertainty
High
1-Star Price
$311.23
5-Star Price
$128.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Arista Networks has gained a top market share position in high-speed switching, resulting, in our view, from technology leadership, and it continues to gain share.

Bears

Arista Networks has a weaker position in areas of networking outside high-speed switching and may struggle to expand into adjacent markets.

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News

Trading Information

Previous Close Price
$271.91
Day Range
$270.14275.54
52-Week Range
$131.68292.66
Bid/Ask
$270.00 / $271.75
Market Cap
$85.40 Bil
Volume/Avg
1.2 Mil / 2.1 Mil

Key Statistics

Price/Earnings (Normalized)
39.48
Price/Sales
14.78
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.13%

Company Profile

Arista Networks Inc is a networking equipment provider that primarily sells Ethernet switches and software to data centers. Its marquee product is its extensible operating system, or EOS, that runs a single image across every single one of its devices. The firm operates as one reportable segment. It has steadily gained market share since its founding in 2004, with a focus on high-speed applications. Arista counts Microsoft and Meta Platforms as its largest customers and derives roughly three quarters of its sales from North America.
Sector
Technology
Industry
Computer Hardware
Stock Style Box
Large Growth
Total Number of Employees
4,023

Competitors

Valuation

Metric
ANET
CSCO
HPE
Price/Earnings (Normalized)
39.4811.666.88
Price/Book Value
11.824.210.90
Price/Sales
14.783.430.67
Price/Cash Flow
42.2612.173.58
Price/Earnings
ANET
CSCO
HPE

Financial Strength

Metric
ANET
CSCO
HPE
Quick Ratio
3.161.100.52
Current Ratio
4.391.370.87
Interest Coverage
33.7615.29
Quick Ratio
ANET
CSCO
HPE

Profitability

Metric
ANET
CSCO
HPE
Return on Assets (Normalized)
26.49%17.02%5.02%
Return on Equity (Normalized)
36.91%38.38%13.88%
Return on Invested Capital (Normalized)
34.52%30.59%8.80%
Return on Assets
ANET
CSCO
HPE
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