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Is Arista (ANET) Stock a Smart Buy Before Q2 Earnings Release?
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Arista Networks, Inc. (ANET - Free Report) is scheduled to report second-quarter 2024 earnings on Jul 30. The Zacks Consensus Estimate for revenues and earnings is pegged at $1.64 billion and $1.94 per share, respectively.
Earnings estimates for Arista have improved from $7.49 per share to $7.93 for 2024 and from $8.47 per share to $8.93 for 2025 over the past 90 days.
ANET Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The communications components provider delivered a four-quarter earnings surprise of 15.4%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 14.4%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Arista for the second 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 perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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 launched Etherlink AI platforms for optimal network performance across the most demanding AI workloads, including training and inferencing. Powered by new AI-optimized Arista EOS features, the new product portfolio can support more than 100,000 XPUs with 2-tier network topologies. This delivers superior application performance compared to more complex multi-tier networks while offering advanced monitoring capabilities, including flow-level visibility.
The company also collaborated with NVIDIA Corporation (NVDA - Free Report) for a technology demonstration of how an Arista EOS-based remote AI agent allows the combined, interdependent AI cluster to be managed as a single solution. The demonstration marks the first step in achieving a multi-vendor, interoperable ecosystem that enables control and coordination between AI networking and AI compute infrastructure and establishes Arista as a leading player for providing optimal GPU and network-coordinated performance. These are likely to have generated incremental revenues in the quarter.
Price Performance
Over the past year, Arista has gained 95.2% compared with the industry’s growth of 66.9%, outperforming peers like Juniper Networks, Inc. (JNPR - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) .
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Arista appears to be tradinrelatively expensive compared to the industry and above its mean. Going by the price/earnings ratio, the company shares currently trade at 36.96 forward earnings, higher than 31.06 for the industry and the stock’s mean of 31.72.
Image Source: Zacks Investment Research
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.
It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Microsoft Teams and Zoom.
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Arista appears to be a solid investment proposition, although it looks a bit expensive relative to its valuation metrics. 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.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed to come up trumps in the ensuing earnings. Hence, investors are likely to profit if they bet on this high-flying stock now.
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Is Arista (ANET) Stock a Smart Buy Before Q2 Earnings Release?
Arista Networks, Inc. (ANET - Free Report) is scheduled to report second-quarter 2024 earnings on Jul 30. The Zacks Consensus Estimate for revenues and earnings is pegged at $1.64 billion and $1.94 per share, respectively.
Earnings estimates for Arista have improved from $7.49 per share to $7.93 for 2024 and from $8.47 per share to $8.93 for 2025 over the past 90 days.
ANET Estimate Trend
Image Source: Zacks Investment Research
Earnings Surprise History
The communications components provider delivered a four-quarter earnings surprise of 15.4%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 14.4%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Arista for the second 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 perfectly 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 +1.72% 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 launched Etherlink AI platforms for optimal network performance across the most demanding AI workloads, including training and inferencing. Powered by new AI-optimized Arista EOS features, the new product portfolio can support more than 100,000 XPUs with 2-tier network topologies. This delivers superior application performance compared to more complex multi-tier networks while offering advanced monitoring capabilities, including flow-level visibility.
The company also collaborated with NVIDIA Corporation (NVDA - Free Report) for a technology demonstration of how an Arista EOS-based remote AI agent allows the combined, interdependent AI cluster to be managed as a single solution. The demonstration marks the first step in achieving a multi-vendor, interoperable ecosystem that enables control and coordination between AI networking and AI compute infrastructure and establishes Arista as a leading player for providing optimal GPU and network-coordinated performance. These are likely to have generated incremental revenues in the quarter.
Price Performance
Over the past year, Arista has gained 95.2% compared with the industry’s growth of 66.9%, outperforming peers like Juniper Networks, Inc. (JNPR - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) .
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Arista appears to be tradinrelatively expensive compared to the industry and above its mean. Going by the price/earnings ratio, the company shares currently trade at 36.96 forward earnings, higher than 31.06 for the industry and the stock’s mean of 31.72.
Image Source: Zacks Investment Research
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.
It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Microsoft Teams and Zoom.
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Arista appears to be a solid investment proposition, although it looks a bit expensive relative to its valuation metrics. 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.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed to come up trumps in the ensuing earnings. Hence, investors are likely to profit if they bet on this high-flying stock now.