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Arista Networks (ANET) Dips More Than Broader Markets: What You Should Know

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Arista Networks (ANET - Free Report) closed the most recent trading day at $177.92, moving -1.8% from the previous trading session. This change lagged the S&P 500's 1.47% loss on the day. Elsewhere, the Dow lost 1.14%, while the tech-heavy Nasdaq lost 1.57%.

Coming into today, shares of the cloud networking company had lost 0.43% in the past month. In that same time, the Computer and Technology sector lost 1.46%, while the S&P 500 lost 1.43%.

Arista Networks will be looking to display strength as it nears its next earnings release. In that report, analysts expect Arista Networks to post earnings of $1.58 per share. This would mark year-over-year growth of 26.4%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales 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 should also note any recent changes to analyst estimates for Arista Networks. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.02% higher. Arista Networks is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Arista Networks has a Forward P/E ratio of 29.39 right now. Its industry sports an average Forward P/E of 21.68, so we one might conclude that Arista Networks is trading at a premium comparatively.

Meanwhile, ANET's PEG ratio is currently 1.57. 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. ANET's industry had an average PEG ratio of 1.57 as of yesterday's close.

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

The Zacks Industry Rank gauges the strength of our individual 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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