Arista Networks (NYSE: ANET) has significantly outperformed Cisco Systems (NASDAQ: CSCO) over the past five years, with Arista’s stock rising nearly 540% compared to Cisco’s 50%. The S&P 500 index grew by more than 90% during the same period. Analysts project Arista’s revenue and earnings per share (EPS) to increase at a compound annual growth rate (CAGR) of 19% and 15%, respectively, from 2024 to 2027, while Cisco’s growth is expected at 5% and 9% CAGR over the same timeframe.
Arista’s revenue grew at a CAGR of 24% from fiscal 2019 to fiscal 2024, while Cisco’s revenue stagnated with a CAGR of less than 1%, affected by supply chain challenges and reduced orders during the pandemic. In contrast, Cisco has focused on diversifying through acquisitions like Acacia Communications and ThousandEyes, while Arista has also acquired companies such as Awake Security and Pluribus to enhance its market position.
As of fiscal 2024, Cisco trades at 17 times its forward adjusted earnings with a dividend yield of 2.5%, whereas Arista is priced at 33 times its forward adjusted earnings without a dividend. The contrasting growth trajectories suggest Arista could pose a long-term challenge to Cisco in the cloud and data center market.
