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Arista Networks (ANET) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Arista Networks (ANET) closed at $295.16 in the latest trading session, marking a -1.35% move from the prior day. This change lagged the S&P 500's daily loss of 0.01%. Meanwhile, the Dow lost 0.1%, and the Nasdaq, a tech-heavy index, added 0.12%.

Heading into today, shares of the cloud networking company had gained 13.35% over the past month, outpacing the Computer and Technology sector's gain of 4.57% and the S&P 500's gain of 2.24% in that time.

Investors will be hoping for strength from ANET as it approaches its next earnings release. On that day, ANET is projected to report earnings of $2.07 per share, which would represent year-over-year growth of 24.7%. Our most recent consensus estimate is calling for quarterly revenue of $594.21 million, up 25.76% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.27 per share and revenue of $2.65 billion. These totals would mark changes of +16.46% and +23.33%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ANET. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.54% higher within the past month. ANET is holding a Zacks Rank of #1 (Strong Buy) right now.

Investors should also note ANET's current valuation metrics, including its Forward P/E ratio of 32.27. Its industry sports an average Forward P/E of 19.79, so we one might conclude that ANET is trading at a premium comparatively.

Meanwhile, ANET's PEG ratio is currently 1.6. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Communication - Components industry currently had an average PEG ratio of 2 as of yesterday's close.

The Communication - Components industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 16, putting it in the top 7% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ANET in the coming trading sessions, be sure to utilize Zacks.com.


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