Arista Networks, Inc.’s ANET shares have witnessed a steady uptrend over the past year, barring minor hiccups, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow.
Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products. It remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Arista is witnessing solid demand trends among enterprise customers backed by its multi-domain modern software approach, which is built upon its unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. The versatility of Arista’s unified software stack across various use cases, including WAN routing and campus and data center infrastructure, sets it apart from other competitors in the industry.
Further, its strong emphasis on quality, solid execution and consistent release schedule are driving more value for customers. Steady improvement in lead times and easing of supply chain woes are major tailwinds.
With customers deploying transformative cloud networking solutions, the company has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom.
Arista continues benefiting from the expanding cloud networking market, driven by strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration.
It offers one of the broadest product lines of datacenter and campus Ethernet switches and routers in the industry. Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling.
Arista is scheduled to report first-quarter 2024 results on May 7, after the closing bell. The company pulled off a trailing four-quarter earnings surprise of 13.3%, on average, beating the earnings estimates on each occasion.
The stock is up 102% over the past year compared with the industry’s rise of 56.2%.
Estimates for Q1
The Santa Clara, CA-based company is expected to have recorded year-over-year higher revenues in the first quarter on the back of easing of supply chain anomalies and an improvement in lead time. It is also likely to have a healthy improvement in margins owing to the optimization of manufacturing output.
The Zacks Consensus Estimate for total revenues for the company stands at $1,541 million. It generated revenues of $1,351 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.74 per share, indicating growth from $1.43 in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for Arista for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. With an Earnings ESP of +3.76% and a Zacks Rank #2, ANET has a high probability of an earnings beat.
Arista Networks, Inc. Price and EPS Surprise 
Arista Networks, Inc. price-eps-surprise | Arista Networks, Inc. Quote
End Note
With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, it appears to be a solid investment proposition and a long-term stock to have in your portfolio. Moreover, with a robust earnings surprise history and favorable Earnings ESP model metrics, the stock appears primed to come up trumps in the ensuing earnings, fueling further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
StoneCo Ltd. STNE is set to release quarterly numbers on May 13. It has an Earnings ESP of +2.35% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Applied Materials, Inc. AMAT is +0.31% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 16.
The Earnings ESP for NVIDIA Corporation NVDA is +2.50% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 22.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
