Financial Review: Arista Networks (ANET) and The Competition

Arista Networks (NYSE: ANET) is one of 70 public companies in the “Communications & Networking” industry, but how does it contrast to its rivals? We will compare Arista Networks to related companies based on the strength of its earnings, risk, valuation, institutional ownership, dividends, profitability and analyst recommendations.

Profitability

This table compares Arista Networks and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arista Networks 25.10% 26.23% 16.62%
Arista Networks Competitors -2.33% -5.94% 0.30%

Risk and Volatility

Arista Networks has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Arista Networks’ rivals have a beta of 1.17, suggesting that their average stock price is 17% more volatile than the S&P 500.

Insider & Institutional Ownership

59.4% of Arista Networks shares are owned by institutional investors. Comparatively, 62.9% of shares of all “Communications & Networking” companies are owned by institutional investors. 28.1% of Arista Networks shares are owned by company insiders. Comparatively, 13.2% of shares of all “Communications & Networking” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Arista Networks and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arista Networks 0 13 18 0 2.58
Arista Networks Competitors 383 2512 4041 161 2.56

Arista Networks presently has a consensus target price of $182.33, indicating a potential downside of 9.51%. As a group, “Communications & Networking” companies have a potential upside of 28.86%. Given Arista Networks’ rivals higher probable upside, analysts clearly believe Arista Networks has less favorable growth aspects than its rivals.

Earnings and Valuation

This table compares Arista Networks and its rivals revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Arista Networks $1.13 billion $184.18 million 41.63
Arista Networks Competitors $3.30 billion $420.04 million -2.12

Arista Networks’ rivals have higher revenue and earnings than Arista Networks. Arista Networks is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Summary

Arista Networks beats its rivals on 8 of the 13 factors compared.

Arista Networks Company Profile

Arista Networks, Inc. is a supplier of cloud networking solutions that use software innovations to address the needs of Internet companies, cloud service providers and data centers for enterprise support. It develops, markets and sells cloud networking solutions, which consist of its Gigabit Ethernet switches and related software. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), a set of network applications and its Ethernet switching and routing platforms. The programmability of EOS has allowed it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has also allowed it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. EOS supports cloud and virtualization solutions, including VMware NSX, Microsoft System Center and other cloud management frameworks.

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