Arista Networks (ANET) Gains But Lags Market: What You Should Know

This story originally appeared on Zacks

Arista Networks (ANET) closed at $122.32 in the latest trading session, marking a +0.08% move from the prior day. The stock lagged the S&P 500’s daily gain of 0.52%. At the same time, the Dow lost 0.06%, and the tech-heavy Nasdaq gained 0.37%.

Coming into today, shares of the cloud networking company had lost 7.88% in the past month. In that same time, the Computer and Technology sector lost 10.84%, while the S&P 500 lost 6.51%.

Wall Street will be looking for positivity from Arista Networks as it approaches its next earnings report date. This is expected to be February 14, 2022. On that day, Arista Networks is projected to report earnings of $0.74 per share, which would represent year-over-year growth of 19.35%. Meanwhile, our latest consensus estimate is calling for revenue of $790.58 million, up 21.91% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for Arista Networks. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.18% higher. Arista Networks is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that Arista Networks has a Forward P/E ratio of 34.65 right now. Its industry sports an average Forward P/E of 18.39, so we one might conclude that Arista Networks is trading at a premium comparatively.

We can also see that ANET currently has a PEG ratio of 2.07. 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 1.79 at yesterday’s closing price.

The Communication – Components industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 147, putting it in the bottom 43% 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.

Zacks’ Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Arista Networks, Inc. (ANET): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research