Now trading at a price of $148.4, Arista Networks has moved 3.87% so far today. In contrast, the S&P 500 index moved 0.16%. Read below for a basic value analysis of Arista Networks.
Arista Networks shares moved 29.49% over the last 52 weeks, with a high of $145.17 and a low of $89.11. During this time, the stock outperformed the S&P 500 index by 36.3%. As of January 2022, the company's 50-day average price is $127.0. Arista Networks (formerly Arastra) is an American computer networking company headquartered in Santa Clara, California. The company designs and sells multilayer network switches to deliver software-defined networking (SDN) solutions for large datacenter, cloud computing, high-performance computing, and high-frequency trading environments. The large-cap Technology company is based in Santa Clara, CA. Arista Networks has returned a 0.0% dividend yield over the last 12 months.
Snapshot of the Company's Higher Operating Margins Than the 21.41% Industry Average:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $2,415 | $2,322 | $2,948 | $4,381 |
| Revenue Growth | n/a | -3.86% | 26.97% | 48.62% |
| Gross Margins | 63.95% | 63.82% | 63.8% | 61.07% |
| Gross Margins Growth | n/a | -0.2% | -0.03% | -4.28% |
| Operating Margins | 33.37% | 30.14% | 31.37% | 34.86% |
| Operating Margins Growth | n/a | -9.68% | 4.08% | 11.13% |
| Earnings Per Share | $11.26 | $8.33 | $2.73 | $4.41 |
| EPS Growth | n/a | -26.02% | -67.23% | 61.54% |
| Diluted Shares (MM) | 76 | 76 | 308 | 307 |
| Free Cash Flow (MM) | $947 | $720 | $951 | $448 |
| FCF Growth | n/a | -24.02% | 32.15% | -52.88% |
| Capital Expenditures (MM) | $16 | $15 | $65 | $45 |
Arista Networks Is Overpriced:
Compared to the Technology sector's average of 27.16, Arista Networks has a trailing twelve month P/E ratio of 50.99 and, according to its EPS guidance of 6.45, an expected P/E ratio of 23.01. Arista Networks's PEG ratio is 1.47 based on its 34.8% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Arista Networks's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 3.91, which suggests that the company's shares are actually overvalued.
Arista Networks's P/B ratio is 9.13 compared to its sector average of 6.23. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 214.66% above their fair value as expressed by Benjamin Graham's formula:
√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 6.21 * 15.92) = $47.16
20 analysts are following Arista Networks and have set target prices ranging from $140.0 to $225.0 per share. On average, they have given the company a rating of buy. At the current price of $148.4, ANET is trading -11.47% away from its average analyst target price of $167.62 per share, implying an analyst consensus of some upside potential for the stock.
The company has no information on the number of shares sold short since 1% of the company's shares are tied to short positions. Institutions own 72% of Arista Networks's shares, while the insider ownership rate stands at 23%.
