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Arista Networks (ANET) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, Arista Networks (ANET - Free Report) closed at $187.56, marking a -0.28% move from the previous day. This move lagged the S&P 500's daily gain of 0.84%. Meanwhile, the Dow gained 0.96%, and the Nasdaq, a tech-heavy index, added 0.81%.

Coming into today, shares of the cloud networking company had gained 3.71% in the past month. In that same time, the Computer and Technology sector gained 2.69%, while the S&P 500 gained 0.19%.

Investors will be hoping for strength from Arista Networks as it approaches its next earnings release. The company is expected to report EPS of $1.58, up 26.4% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.48 billion, up 25.68% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.16 per share and revenue of $5.75 billion. These totals would mark changes of +34.5% and +31.29%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Arista Networks. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.02% higher. Arista Networks is currently sporting a Zacks Rank of #2 (Buy).

Looking at its valuation, Arista Networks is holding a Forward P/E ratio of 30.51. Its industry sports an average Forward P/E of 21.53, so we one might conclude that Arista Networks is trading at a premium comparatively.

Also, we should mention that ANET has a PEG ratio of 1.63. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Communication - Components industry currently had an average PEG ratio of 1.63 as of yesterday's close.

The Communication - Components industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 72, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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