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Bull of the Day: Arista Networks (ANET)

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Stocks faced adverse price action following Powell’s testimony last week, with hawkish comments surrounding the peak Fed funds rate spooking investors.

Still, the outlook remains strong for many stocks, including Arista Networks (ANET - Free Report) . The company currently sports the highly-coveted Zacks Rank #1 (Buy), with earnings estimates drifting higher across all timeframes.

Zacks Investment Research
Image Source: Zacks Investment Research

Arista Networks provides cloud networking solutions for data centers and cloud computing environments. The company utilizes a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud footprint.

Let’s take a closer look at how the company currently stacks up.

Quarterly Performance

ANET has consistently delivered strong quarterly results, exceeding the Zacks Consensus EPS Estimate by double-digit percentages in three consecutive quarters.

Just in its latest release, ANET reported bottom line results 16.5% above expectations and delivered a 6.6% revenue surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

The market has undoubtedly appreciated ANET’s quarterly results, with shares soaring following each of its last three releases. This is illustrated in the chart below.

Zacks Investment Research
Image Source: Zacks Investment Research

Valuation

ANET’s 25.7X forward earnings multiple is on the higher end of the spectrum but remains well below the 34.2X five-year median and nearly unbelievable highs of 66.7X in 2022.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, the company’s forward price-to-sales presently sits at 8.3X, a few ticks below the 8.5X five-year median and highs of 15.1X in 2022.

Zacks Investment Research
Image Source: Zacks Investment Research

Growth Estimates

And to top it off, the company sports a strong growth profile, with the Zacks Consensus EPS Estimate of $5.79 for its current fiscal year (FY23), indicating an improvement of 26% year-over-year.

And in FY24, the company’s earnings are forecasted to grow a further 11%.

The projected earnings growth comes on the back of forecasted year-over-year revenue upticks of 25% in FY23 and 11% in FY24.

Bottom Line

Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.

Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Arista Networks (ANET - Free Report) would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).


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