Education
About Us
Working with TipRanks
Follow Us
Arista Networks (ANET)
NYSE:ANET
Top Page
Arista Networks
(NYSE:ANET)75Outperform
Positive Factors
AI and technology investments
Revenue from major customers like Microsoft and Meta is substantial, and aggressive investments by hyperscalers in AI capacity should positively impact Arista's revenue.
Financial performance
Key financial metrics and more modest valuation create a favorable risk/reward.
Negative Factors
Competition
Concern that white-box vendors have made inroads into parts of the network has pressured the shares.
Arista Networks (ANET) vs. S&P 500 (SPY)
Market Cap
$107.85B
Dividend YieldN/A
Average Volume (3M)12.72M
Price to Earnings (P/E)38.4
Beta (1Y)1.77
Revenue Growth19.50%
EPS Growth34.64%
CountryUS
Employees4,412
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)2.23
Shares Outstanding1,261,122,600
10 Day Avg. Volume15,749,317
30 Day Avg. Volume12,719,867
Financial Highlights & Ratios
PEG Ratio1.11
Price to Book (P/B)N/A
Price to Sales (P/S)15.49
Price to Cash Flow (P/CF)26.30
P/FCF Ratio26.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$124.00Price Target Upside41.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Arista Networks Business Overview & Revenue Model
Company DescriptionArista Networks, Inc. is a prominent player in the cloud networking sector, specializing in providing high-performance networking solutions for data centers, cloud computing environments, and enterprise networks. The company's core products include switches, routers, and software that optimize network performance and enhance efficiency. Arista's solutions are designed to meet the needs of large-scale internet companies, cloud service providers, and other data-intensive industries, leveraging cutting-edge technology to deliver scalable and secure networking solutions.
How the Company Makes MoneyArista Networks generates revenue primarily through the sale of its networking hardware and software products. The company's key revenue streams include the sale of its Ethernet switches and routers, which are integral to building high-speed, scalable networks. Additionally, Arista offers software products and services that enhance network functionality and management capabilities, providing a recurring revenue stream. The company has established significant partnerships with major cloud providers and tech companies, which contribute to its earnings by expanding its market reach and enhancing its product offerings through integrations. Arista's focus on innovation and customer-driven solutions ensures a competitive edge in the rapidly evolving networking industry.
Arista Networks Financial Statement Overview
Summary
Arista Networks exhibits excellent financial performance with strong revenue growth, high profit margins, and effective cost management. The balance sheet is robust with no debt, high equity ratio, and impressive return on equity. Cash flow management is effective with significant free cash flow growth, highlighting the company's financial health and stability.Income Statement
Arista Networks has demonstrated impressive revenue growth with a robust revenue increase of 19.5% from 2023 to 2024. The company maintains a strong gross profit margin of 64.1%, and a net profit margin of 40.7%, showcasing effective cost management and profitability. Both EBIT and EBITDA margins are healthy at 42.1%, reflecting operational efficiency. These metrics highlight Arista Networks' strong financial performance and competitive positioning in the market.95
Very Positive
Balance Sheet
The company has a solid balance sheet with no debt and a strong equity standing, resulting in a favorable debt-to-equity ratio of 0.0. The return on equity is remarkable at 28.5%, indicating efficient use of equity capital to generate profits. The equity ratio of 71.2% further underlines financial stability and low leverage risk, making Arista Networks a financially sound company.90
Very Positive
Cash Flow
Arista Networks exhibits strong cash flow management with a significant free cash flow growth rate of 83.8%. The operating cash flow to net income ratio is robust at 1.3, demonstrating effective cash generation relative to net income. The free cash flow to net income ratio is also strong at 1.3, indicating efficient conversion of income to cash. These metrics highlight the company’s ability to generate and manage cash effectively.92
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.00B | 5.86B | 4.38B | 2.95B | 2.32B | Gross Profit |
| 4.49B | 3.63B | 2.68B | 1.88B | 1.48B | EBIT |
| 2.94B | 2.26B | 1.53B | 924.74M | 699.68M | EBITDA |
| 2.94B | 2.33B | 1.59B | 975.07M | 699.68M | Net Income Common Stockholders |
| 2.85B | 2.09B | 1.35B | 840.85M | 634.56M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 8.30B | 5.01B | 3.02B | 3.41B | 2.87B | Total Assets |
| 14.04B | 9.95B | 6.78B | 5.73B | 4.74B | Total Debt |
| 0.00 | 0.00 | 43.96M | 56.53M | 72.40M | Net Debt |
| -2.76B | -1.94B | -627.74M | -564.29M | -820.82M | Total Liabilities |
| 4.05B | 2.73B | 1.89B | 1.76B | 1.42B | Stockholders Equity |
| 9.99B | 7.22B | 4.89B | 3.98B | 3.32B |
| Cash Flow | Free Cash Flow | |||
| 3.68B | 2.00B | 448.17M | 951.12M | 719.73M | Operating Cash Flow |
| 3.71B | 2.03B | 492.81M | 1.02B | 735.11M | Investing Cash Flow |
| -2.46B | -687.45M | 216.33M | -925.56M | -608.80M | Financing Cash Flow |
| -421.81M | -83.75M | -654.60M | -360.88M | -346.34M |
Arista Networks Technical Analysis
Negative
87.82
Price Trends
110.09
Negative
105.99
Negative
95.72
Negative
Market Momentum
-6.93
Positive
33.85
Neutral
16.79
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ANET, the sentiment is Negative. The current price of 87.82 is below the 20-day moving average (MA) of 102.76, below the 50-day MA of 110.09, and below the 200-day MA of 95.72, indicating a bearish trend. The MACD of -6.93 indicates Positive momentum. The RSI at 33.85 is Neutral, neither overbought nor oversold. The STOCH value of 16.79 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ANET.
Arista Networks Risk Analysis
Arista Networks disclosed 57 risk factors in its most recent earnings report. Arista Networks reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arista Networks Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $107.85B | 38.42 | 28.54% | ― | 19.50% | 34.64% | |
74 Outperform | $251.67B | 27.72 | 20.18% | 2.52% | -5.34% | -30.57% | |
72 Outperform | $24.74B | 9.86 | 10.29% | 2.73% | 3.30% | 25.00% | |
71 Outperform | $19.03B | 17.31 | 114.27% | 2.15% | 5.46% | 23.49% | |
60 Neutral | $11.97B | 41.77 | 6.02% | 2.44% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
44 Neutral | $1.93B | ― | -237.76% | ― | -24.49% | -250.61% |
* Technology Sector Average
Performance Comparison
ANET
Arista Networks
87.82
16.70
23.48%
CSCO
Cisco Systems
63.96
16.30
34.20%
EXTR
Extreme Networks
15.16
3.13
26.02%
JNPR
Juniper Networks
36.01
-0.54
-1.48%
NTAP
NetApp
94.87
-8.12
-7.88%
HPE
Hewlett Packard Enterprise
18.89
0.61
3.34%
Arista Networks Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -20.93% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook for Arista Networks, driven by record revenue, strong growth in cloud and AI segments, and leadership in high-speed Ethernet. However, challenges such as the Meta revenue decline, decreased international revenue contribution, and gross margin pressure were noted.Highlights
Record Revenue and Growth
Arista Networks achieved a record revenue of $7 billion for fiscal year 2024, with a nearly 20% year-over-year growth, surpassing the initial guidance of 10% to 12% growth.
Strong Cloud and AI Segment Performance
Cloud and AI titans contributed approximately 48% of total revenue, with significant contributions from Microsoft and Meta at approximately 20% and 14.6%, respectively.
Leadership in High-Speed Ethernet
Arista gained market share in the 100, 200, and 400 gigabit Ethernet switching category, achieving over 40% market share according to industry analysts.
AI Revenue Goals
Arista is optimistic about achieving its AI revenue goal of $1.5 billion in AI centers, including $750 million in AI back-end clusters in 2025.
Network Software and Subscription Services Growth
The network software and subscription services category surpassed $1 billion in revenue for 2024, contributing approximately 17% of total revenue.
Strong Financial Performance
Q4 2024 revenues were $1.93 billion, up 25.3% year-over-year, with a non-GAAP operating margin of 47.5% and a net income for the quarter of $830.1 million.
Lowlights
Meta Revenue Decline
Arista's revenue from Meta showed a decline in 2024 due to Meta's reduced CapEx during its 'year of efficiency.'
Decreased International Revenue Contribution
International revenue for Q4 2024 was 16% of total revenue, down from 17.6% in the previous quarter, due to increased domestic revenue from large global customers.
Gross Margin Decrease
Q4 2024 gross margin was 64.2%, slightly down from 65.4% in the prior year, influenced by mix changes and China tariffs.
Challenges with Fifth AI Customer
One of Arista's five AI customers is stalled due to awaiting new GPUs and funding, impacting the rollout of AI back-end clusters.
Company Guidance
During the fourth quarter of 2024, Arista Networks provided robust financial guidance, projecting a revenue growth of 17% for fiscal year 2025, aiming for approximately $8.2 billion in revenue. The company reported Q4 2024 revenues of $1.93 billion, with a non-GAAP earnings per share of $0.65, and achieved a full-year revenue growth of 19.5%, reaching a record $7 billion. Arista maintained strong non-GAAP gross margins of 64.2% for the quarter, supported by efficient supply chain management. The company highlighted the contribution of its cloud and AI sectors, which accounted for approximately 48% of annual revenue, and its enterprise and financial sectors, contributing around 35%. Additionally, Arista's subscription-based network services and software grew to represent 17% of total revenue, with the network adjacencies market, including routing and campus solutions, contributing approximately 18%. Arista emphasized its commitment to achieving a $750 million goal in AI-related revenue for 2025, driven by its strategic focus on AI and cloud innovations. The company also reiterated its strategic positioning with key global clients, including Microsoft and Meta, and emphasized its leadership in high-performance network switching, particularly in 100, 200, and 400 gigabit Ethernet ports.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.