Arista Networks, Inc. (NYSE: ANET)

Sector: Technology Industry: Computer Hardware CIK: 0001596532
Market Cap 164.72 Bn
P/B 13.83
P/E 49.07
P/S 19.50
ROIC (Qtr) 25.16
Div Yield % 0.00
Rev 1y % (Qtr) 27.47
Total Debt (Qtr) 0.00
Debt/Equity (Qtr) 0.00

About

Arista Networks, Inc. (ANET) is a prominent player in the data-driven, client-to-cloud networking industry. The company is renowned for its innovative approach to networking, delivering high-performance, scalable, and programmable solutions for large data center, campus, and routing environments. Arista's primary business activities revolve around providing advanced networking solutions. The company operates in the data center, campus, and routing environments, offering products and services that cater to the needs of large-scale cloud companies,...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 4.14B provides strong 10.18x coverage of stock compensation 406.83M, indicating sustainable incentive practices.
  • Robust free cash flow of 4.05B exceeds capital expenditure of 94.95M by 42.61x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 4.14B provides 6.48x coverage of SG&A expenses 639.13M, showing efficient operational cost management.
  • Short-term investments of 7.78B provide solid 1.86x coverage of other current liabilities 4.19B, indicating strong liquidity.
  • Tangible assets of 17.63B provide robust 4.21x coverage of other current liabilities 4.19B, indicating strong asset backing.

Bear case

  • Operating cash flow of 4.14B barely covers its investment activities of (3.89B), with a coverage ratio of -1.07, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (3.89B) provide weak support for R&D spending of 1.17B, which is -3.31x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 2.33B provide limited coverage of acquisition spending of (300M), which is -7.76x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 4.14B provides insufficient coverage of deferred revenue obligations of 4.69B, which is 0.88x, raising concerns about future service delivery capabilities.
  • Short-term investments of 7.78B significantly exceed cash reserves of 2.33B, which is 3.34x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.

Peer comparison

Companies in the Computer Hardware
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ANET Arista Networks, Inc. 164.72 Bn 49.07 19.50 0.00 Bn
2 DELL Dell Technologies Inc. 86.37 Bn 16.20 0.83 31.24 Bn
3 WDC Western Digital Corp 60.34 Bn 23.73 5.03 4.68 Bn
4 STX Seagate Technology Holdings plc 58.67 Bn 34.25 6.14 4.99 Bn
5 SNDK Sandisk Corp 34.41 Bn -19.78 4.42 1.35 Bn
6 PSTG Pure Storage, Inc. 21.84 Bn 167.52 6.27 0.23 Bn
7 HPQ Hp Inc 21.10 Bn 8.34 0.38 9.67 Bn
8 SMCI Super Micro Computer, Inc. 17.45 Bn 22.01 0.83 4.78 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 9.00 2.06
EV to Cash from Ops. EV/CFO 39.24 -0.65
EV to Debt EV to Debt 0.00 56.37
EV to EBIT EV/EBIT 40.61 2.89
EV to EBITDA EV/EBITDA 44.06 -1.74
EV to Free Cash Flow [EV/FCF] EV/FCF 40.16 -7.44
EV to Market Cap EV to Market Cap 0.99 7.64
EV to Revenue EV/Rev 19.23 78.30
Price to Book Value [P/B] P/B 13.83 -28.73
Price to Earnings [P/E] P/E 49.07 6.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 1.25
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 12.30
Dividend per Basic Share Div per Share (Qtr) 0.00 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.93
Interest Coverage Int. cover (Qtr) 0.00 -105.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -270.76 -11.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -26.72 867.36
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 25.96 -189.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 29.58 -40.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 30.31 -117.00
EBT Growth (1y) % EBT 1y % (Qtr) 30.31 -116.68
EPS Growth (1y) % EPS 1y % (Qtr) 25.94 -70.06
FCF Growth (1y) % FCF 1y % (Qtr) 27.31 712.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 27.62 34.90
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.80
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.50 7.26
Current Ratio Curr Ratio (Qtr) 3.25 13.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.00 -3.57
Interest Cover Ratio Int Coverage (Qtr) 0.00 -105.42
Times Interest Earned Times Interest Earned (Qtr) 0.00 -105.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 48.10 -629.92
EBIT Margin % EBIT Margin % (Qtr) 47.36 -683.67
EBT Margin % EBT Margin % (Qtr) 47.36 -687.58
Gross Margin % Gross Margin % (Qtr) 64.30 34.79
Net Profit Margin % Net Margin % (Qtr) 39.70 -692.43