Arista Networks logged a -0.2% change during today's afternoon session, and is now trading at a price of $213.32 per share.
Arista Networks returned gains of 62.0% last year, with its stock price reaching a high of $218.36 and a low of $108.91. Over the same period, the stock outperformed the S&P 500 index by 47.0%. More recently, the company's 50-day average price was $192.78. 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 Telecommunications company has 3,612 full time employees. Arista Networks has not offered a dividend during the last year.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $2,151 | $2,411 | $2,318 | $2,948 | $4,381 | $5,263 |
| Gross Margins | 49% | 64% | 64% | 64% | 61% | 60% |
| Operating Margins | 13.0% | 36.0% | 32.0% | 32.0% | 36.0% | 38.0% |
| Net Margins | 15.0% | 36.0% | 27.0% | 28.0% | 31.0% | 32.0% |
| Net Income (MM) | $328 | $860 | $635 | $841 | $1,352 | $1,709 |
| Net Interest Expense (MM) | $32 | $56 | $39 | $7 | $55 | $92 |
| Depreciation & Amort. (MM) | $28 | $33 | $35 | $50 | $63 | $74 |
| Earnings Per Share | $4.06 | $2.66 | $2.0 | $2.63 | $4.27 | $5.41 |
| Diluted Shares (MM) | 81 | 324 | 318 | 319 | 316 | 312 |
| Free Cash Flow (MM) | $479 | $947 | $720 | $951 | $448 | $939 |
| Capital Expenditures (MM) | $24 | $16 | $15 | $65 | $45 | $45 |
| Net Current Assets (MM) | $1,776 | $2,181 | $2,418 | $3,057 | $3,661 | $4,523 |
| Long Term Debt (MM) | $0 | $282 | $247 | $116 | $0 | $0 |
| Net Debt / EBITDA | -2.05 | -0.93 | -0.83 | -0.51 | -0.41 | -0.61 |
Arista Networks benefits from growing revenues and increasing reinvestment in the business, low leverage, and wider gross margins than its peer group. The company's financial statements show decent operating margins with a positive growth rate and positive EPS growth. Furthermore, Arista Networks has irregular cash flows.
The Market May Be Overvaluing Arista Networks's Earnings and Assets:
Arista Networks has a trailing twelve month P/E ratio of 32.1, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of $7.19, the company has a forward P/E ratio of 26.8. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 4.9%. On this basis, the company's PEG ratio is 6.55, which suggests that it is overpriced. Furthermore, Arista Networks is likely overvalued compared to the book value of its equity, since its P/B ratio of 10.2 is higher than the sector average of 3.12. The company's shares are currently trading 340.4% above their Graham number.
Arista Networks Has an Analyst Consensus of Some Upside Potential:
The 18 analysts following Arista Networks have set target prices ranging from $180.0 to $248.0 per share, for an average of $219.83 with a buy rating. As of April 2023, the company is trading -12.3% 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 1.2% of the company's shares are sold short. Institutions own 68.0% of the company's shares, and the insider ownership rate stands at 22.66%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $5,951,379,899.
