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Can Healthy Revenue Growth Benefit Arista (ANET) Q3 Earnings?
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Arista Networks, Inc. (ANET - Free Report) is scheduled to report third-quarter 2022 results on Oct 31, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 17.4%, with the bottom line surpassing the Zacks Consensus Estimate by 16 cents. Arista delivered a trailing four-quarter earnings surprise of 10.1%, on average.
The Santa Clara, CA-based cloud networking company is likely to have recorded higher revenues year over year, supported by overall healthy demand. However, due to COVID-19 adversities, Arista is likely to have experienced some supply-chain issues resulting in extended lead time and constrained shipments.
Factors at Play
During the third quarter, Arista upgraded its cloud-grade routing platform by introducing several innovative features to lower customer operational costs and reduce complexity. The innovations drive additional new use cases, including secure enterprise edge, high-speed cloud connect and mobile networks. The improved R3 Series routing platform facilitates power reduction, feature expansion and performance improvements to help meet the rapid bandwidth demand. These capabilities are likely to have translated into incremental revenues in the quarter.
Although the shipments are likely to have improved on a sequential basis, the company expects to have faced supply chain disruptions during the quarter. Despite healthy demand trends and solid revenue contribution from cloud titan customers, the company expects to have witnessed gross margin pressure in the third quarter.
Management expects continued growth within Enterprise customers with strength in adjacencies, software and services. For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $1,060 million, indicating a 41.5% increase from the year-ago quarter’s reported figure. Management expects revenues of $1,025-$1,075 million. Our revenue projection for the quarter is pegged at $1051.5 million. Adjusted earnings per share are pegged at $1.05, which suggests an improvement from 74 cents recorded in the year-earlier quarter.
Earnings Whispers
Our proven model predicts 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 perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.27%, with the former pegged at $1.06 and the latter at $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other 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 Cogent Communications Holdings, Inc. (CCOI - Free Report) is +34.78% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 3.
The Earnings ESP for CDW Corporation (CDW - Free Report) is +0.31% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 2.
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Can Healthy Revenue Growth Benefit Arista (ANET) Q3 Earnings?
Arista Networks, Inc. (ANET - Free Report) is scheduled to report third-quarter 2022 results on Oct 31, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 17.4%, with the bottom line surpassing the Zacks Consensus Estimate by 16 cents. Arista delivered a trailing four-quarter earnings surprise of 10.1%, on average.
The Santa Clara, CA-based cloud networking company is likely to have recorded higher revenues year over year, supported by overall healthy demand. However, due to COVID-19 adversities, Arista is likely to have experienced some supply-chain issues resulting in extended lead time and constrained shipments.
Factors at Play
During the third quarter, Arista upgraded its cloud-grade routing platform by introducing several innovative features to lower customer operational costs and reduce complexity. The innovations drive additional new use cases, including secure enterprise edge, high-speed cloud connect and mobile networks. The improved R3 Series routing platform facilitates power reduction, feature expansion and performance improvements to help meet the rapid bandwidth demand. These capabilities are likely to have translated into incremental revenues in the quarter.
Although the shipments are likely to have improved on a sequential basis, the company expects to have faced supply chain disruptions during the quarter. Despite healthy demand trends and solid revenue contribution from cloud titan customers, the company expects to have witnessed gross margin pressure in the third quarter.
Management expects continued growth within Enterprise customers with strength in adjacencies, software and services. For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $1,060 million, indicating a 41.5% increase from the year-ago quarter’s reported figure. Management expects revenues of $1,025-$1,075 million. Our revenue projection for the quarter is pegged at $1051.5 million. Adjusted earnings per share are pegged at $1.05, which suggests an improvement from 74 cents recorded in the year-earlier quarter.
Earnings Whispers
Our proven model predicts 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 perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.27%, with the former pegged at $1.06 and the latter at $1.05. 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 #3.
Other Stocks to Consider
Here are some other 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:
Unity Software Inc. (U - Free Report) is set to release quarterly numbers on Nov 9. It has an Earnings ESP of +18.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Cogent Communications Holdings, Inc. (CCOI - Free Report) is +34.78% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 3.
The Earnings ESP for CDW Corporation (CDW - Free Report) is +0.31% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 2.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.