Arista Networks (ANET) Outpaces Stock Market Gains: What You Should Know
Arista Networks (ANET) closed at $173.51 in the latest trading session, marking a +1.81% move from the prior day. This change outpaced the S&P 500’s 0.71% gain on the day. Meanwhile, the Dow gained 1.06%, and the Nasdaq, a tech-heavy index, added 4.62%.
Heading into today, shares of the cloud networking company had gained 8% over the past month, outpacing the Computer and Technology sector’s gain of 2.78% and the S&P 500’s gain of 2.65% in that time.
Arista Networks will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2023. The company is expected to report EPS of $1.44, up 33.33% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.38 billion, up 31.07% from the prior-year quarter.
For the full year, our Zacks Consensus Estimates are projecting earnings of $5.87 per share and revenue of $5.54 billion, which would represent changes of +28.17% and +26.33%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Arista Networks. These revisions help to show the ever-changing nature of near-term business trends. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.11% 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 29.02. For comparison, its industry has an average Forward P/E of 23.35, which means Arista Networks is trading at a premium to the group.
Also, we should mention that ANET has a PEG ratio of 1.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Communication – Components was holding an average PEG ratio of 2.25 at yesterday’s closing price.
The Communication – Components industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 60, which puts it in the top 24% 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.
You can find more information on all of these metrics, and much more, on Zacks.com.
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