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Can Solid Revenue Improvement Aid Arista (ANET) Q3 Earnings?
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Arista Networks, Inc. (ANET - Free Report) is set to report third-quarter 2023 results on Oct 30, after the closing bell. The company delivered a trailing four-quarter earnings surprise of 12.8%, on average. In the last reported quarter, it pulled off an earnings surprise of 9.7%, with the bottom line surpassing the Zacks Consensus Estimate by 14 cents.
The company is likely to have reported higher revenues year over year, driven by solid demand for its cloud networking solutions and its strong product portfolio that offers highly scalable, programmable data-driven automation, analytics and world-class support services. Its focus on integrating advanced AI and ML technology into its solutions and optimization of manufacturing output are positives.
Factors at Play
During the quarter, Arista announced that Spark, a prominent telecommunications and digital services company based in New Zealand, has selected its industry-leading cloud networking portfolio. Leveraging Arista’s solutions, Spark aims to enhance its data center networking services for a new private telecommunications cloud platform. The new private cloud network will facilitate Spark’s 5G network rollout, supporting greater flexibility, reliability and scalability for software-defined networks. This is likely to have translated into incremental revenues in the quarter.
During the third quarter, Arista expects an easing of supply chain anomalies and an improvement in the lead time. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. It expects a steady improvement in gross margin owing to the optimization of manufacturing output. This is likely to get reflected in the upcoming results.
Our estimate for total product revenues is pegged at $1,250.3 million, suggesting a 23.9% year-over-year improvement. Our estimate for service revenues stands at $227.2 million, indicating an improvement from the $168.1 million reported in the year-ago quarter.
For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $1,479 million, indicating an increase from the year-ago quarter’s reported figure of $1,177 million. Adjusted earnings per share stands at $1.58, which suggests an improvement from $1.25 recorded in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Arista this time around. 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.96%, with the former pegged at $1.55 and the latter at $1.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Silicon Motion Technology Corporation (SIMO - Free Report) is +3.00% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +2.64% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 25.
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Can Solid Revenue Improvement Aid Arista (ANET) Q3 Earnings?
Arista Networks, Inc. (ANET - Free Report) is set to report third-quarter 2023 results on Oct 30, after the closing bell. The company delivered a trailing four-quarter earnings surprise of 12.8%, on average. In the last reported quarter, it pulled off an earnings surprise of 9.7%, with the bottom line surpassing the Zacks Consensus Estimate by 14 cents.
The company is likely to have reported higher revenues year over year, driven by solid demand for its cloud networking solutions and its strong product portfolio that offers highly scalable, programmable data-driven automation, analytics and world-class support services. Its focus on integrating advanced AI and ML technology into its solutions and optimization of manufacturing output are positives.
Factors at Play
During the quarter, Arista announced that Spark, a prominent telecommunications and digital services company based in New Zealand, has selected its industry-leading cloud networking portfolio. Leveraging Arista’s solutions, Spark aims to enhance its data center networking services for a new private telecommunications cloud platform. The new private cloud network will facilitate Spark’s 5G network rollout, supporting greater flexibility, reliability and scalability for software-defined networks. This is likely to have translated into incremental revenues in the quarter.
During the third quarter, Arista expects an easing of supply chain anomalies and an improvement in the lead time. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. It expects a steady improvement in gross margin owing to the optimization of manufacturing output. This is likely to get reflected in the upcoming results.
Our estimate for total product revenues is pegged at $1,250.3 million, suggesting a 23.9% year-over-year improvement. Our estimate for service revenues stands at $227.2 million, indicating an improvement from the $168.1 million reported in the year-ago quarter.
For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $1,479 million, indicating an increase from the year-ago quarter’s reported figure of $1,177 million. Adjusted earnings per share stands at $1.58, which suggests an improvement from $1.25 recorded in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Arista this time around. 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.96%, with the former pegged at $1.55 and the latter at $1.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Arista Networks, Inc. Price and EPS Surprise
Arista Networks, Inc. price-eps-surprise | Arista Networks, Inc. Quote
Zacks Rank: Arista currently has a Zacks Rank #2.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Intel Corporation (INTC - Free Report) is set to release quarterly numbers on Oct 26. It has an Earnings ESP of +12.98% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation (SIMO - Free Report) is +3.00% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +2.64% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 25.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.