Arista Networks, Inc. ANET is scheduled to report fourth-quarter 2024 earnings on Feb. 18. The Zacks Consensus Estimate for revenues and earnings is pegged at $1.89 billion and 57 cents per share, respectively. Earnings estimates for Arista for 2024 have remained steady at $2.20 per share over the past 60 days and increased marginally to $2.42 per share for 2025.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
ANET Estimate Trend
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Earnings Surprise History
The communications components provider delivered a four-quarter earnings surprise of 14.8%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 14.8%.
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Earnings Whispers
Our proven model does not predict an earnings beat for Arista for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Arista currently has an ESP of 0.00% with a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
Arista holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products.
The company is witnessing solid demand trends among enterprise customers backed by its multi-domain modern software approach, which is built upon its unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. The versatility of Arista’s unified software stack across various use cases, including WAN routing and campus and data center infrastructure, sets it apart from other competitors in the industry.
During the quarter, the company introduced the Switch Aggregation Group (SWAG) capability in Arista EOS along with the CoudVision Leaf Spine Stack (LSS) Management competence to deliver extensive flexibility for network topologies and operations. While SWAG enables Ethernet to group and manage individual switches via a single IP address, LSS allows operators to collectively manage a logical stack of switches within a single networking closet or across the entire campus.
SWAG extends Arista EOS’ modular chassis software architecture and supports flexible network topologies. On the other hand, with CloudVision LSS Management, Arista offers the flexibility to perform network operations on a logical stack of switches in a standards-based, modern leaf-spine architecture rather than being limited to ring or chain topologies. The combination of Arista CloudVision LSS Management and EOS SWAG delivers the broader multi-domain modern operating stacking approach that simplifies operations, eliminates downtime and reduces costs.
Price Performance
Over the past year, Arista has gained 64.7% compared with the industry’s growth of 60.3%, outperforming peers like Juniper Networks, Inc. JNPR and Cisco Systems, Inc. CSCO.
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Key Valuation Metric
From a valuation standpoint, Arista appears to be trading relatively expensive compared to the industry and above its mean. Going by the price/earnings ratio, the company shares currently trade at 44.38 forward earnings, higher than 36.26 for the industry and the stock’s mean of 34.3.
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Investment Considerations
Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations. It offers one of the broadest product lines of datacenter and campus Ethernet switches and routers in the industry. Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency.
In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling. With customers deploying transformative cloud networking solutions, the company has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge.
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Arista appears to be a solid investment proposition. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. With improving earnings estimates, the stock is witnessing a positive investor perception. However, it looks a bit expensive relative to its valuation metrics.
Nevertheless, riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed to record solid quarterly results in the ensuing earnings. Hence, investors are likely to profit if they bet on this high-flying stock now.
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