Now trading at a price of $158.88, Arista Networks has moved -2.3% so far today.
Arista Networks returned gains of 55.9% last year, with its stock price reaching a high of $178.36 and a low of $89.11. Over the same period, the stock outperformed the S&P 500 index by 53.0%. More recently, the company's 50-day average price was $154.38. Arista Networks, Inc. develops, markets, and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Based in Santa Clara, CA, the large-cap Technology company has 3,612 full time employees. Arista Networks has not offered a dividend during the last year.
An Exceptionally Strong Balance Sheet:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $2,411 | $2,318 | $2,948 | $4,381 |
| Gross Margins | 64.1% | 63.9% | 63.8% | 61.1% |
| Operating Margins | 33.4% | 30.2% | 31.4% | 34.9% |
| Net Margins | 35.67% | 27.38% | 28.52% | 30.87% |
| Net Income (MM) | $860 | $635 | $841 | $1,352 |
| Net Interest Income | $51,144 | $27,139 | $7,215 | $27,556 |
| Depreciation & Amort. | -$32,849 | -$44,590 | -$50,334 | -$62,700 |
| Earnings Per Share | $2.66 | $2.0 | $2.63 | $4.47 |
| EPS Growth | n/a | -24.81% | 31.5% | 69.96% |
| Diluted Shares (MM) | 324 | 318 | 319 | 306 |
| Free Cash Flow (MM) | $947 | $720 | $951 | $448 |
| Capital Expenditures (MM) | -$16 | -$15 | -$65 | -$45 |
| Net Current Assets (MM) | $2,181 | $2,418 | $3,057 | $3,661 |
| Current Ratio | 5.81 | 4.99 | 4.34 | 4.29 |
| Net Debt / EBITDA | -1.1 | -1.01 | -0.57 | -0.38 |
Arista Networks has growing revenues and increasing reinvestment in the business, strong margins with a stable trend, and an excellent current ratio. The company also benefits from low leverage, wider gross margins than its peer group, and a strong EPS growth trend.
Arista Networks Has Elevated P/B and P/E Ratios:
Arista Networks has a trailing twelve month P/E ratio of 34.5, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $6.75, the company has a forward P/E ratio of 22.9. Arista Networks's PEG ratio is 3.37 on the basis of the 10.2% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Arista Networks is likely overvalued compared to the book value of its equity, since its P/B ratio of 9.19 is higher than the sector average of 6.23. The company's shares are currently trading 369.7% above their Graham number.
Analysts Give Arista Networks an Average Rating of Buy:
The 16 analysts following Arista Networks have set target prices ranging from $135.0 to $200.0 per share, for an average of $167.88 with a buy rating. As of April 2023, the company is trading -8.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Arista Networks has a very low short interest because 1.8% of the company's shares are sold short. Institutions own 71.5% of the company's shares, and the insider ownership rate stands at 22.96%, suggesting a large amount of insider shareholders. The largest shareholder is the Vanguard Group, Inc., whose 9% stake in the company is worth $4,325,496,852.
