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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Arista Networks, Inc. (XNYS:ANET) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ANET
Name:
ARISTA NETWORKS, INC. (XNYS:ANET)
Sector:
202.26M
Industry:
Computer Hardware
CEO:
Ms. Jayshree Ullal
Total Employees:
2,993
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -281.02% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ARISTA NETWORKS, INC.(ANET) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND COMPUTER HARDWARE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
117.3
One Month Price Target:
$118.18
Six Month Price Target :
$122.55
Likely Price in One Year's Time:
Ticker:
$127.8
Likely Trading Range Today Under (Normal Volatility)
$116.97
Price Upper limit ($) :
$118.02
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$111.12
This week:
$103.47
This month :
$89.65
Other Primary facts
Market Cap:
35.77B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
304.28M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
20.39%
-11.16%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$145.94
$132.48
$88.66
$102.12
Medium risk (<10%) entry points
Buy Call
Sell Call
$128.10
Buy Put:
Sell Put:
$125.23
$106.46
$109.37
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ANET
Sharpe Ratio:
5.91%
Comparison:
ANET, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 81.73% higher than the industry
& ratio is 159.22% higher than the market/S&P 500 average
Average Returns/Yield of
ANET
Daily returns:
0.17%
Weekly returns:
0.83%
Monthly returns:
3.30%
Yearly returns:
26.14%
Comparison of returns:
Average annual returns/yield (last 3 years) is 51.72% above industry average
Classification:
ANET, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.57
Statistical test of Returns:
ANET has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.65%
Weekly Volatility:
5.92%
Monthly Volatility:
11.84%
Yearly Volatility:
41.01%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.95%
Volatility in last five trading days has been -64.05% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.27%
Weekly VaR:
-11.79%
Monthly VaR:
-23.57%
How Much Can the price of
ANET
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-81.66%
This translates to price declining to:
$95.08
This translates to price declining to:
$21.52
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ANET is a 66.37% riskier investment compared to the market/S&P 500 & is 42.53% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -16.74% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ANET
Beta in relation to market/S&P 500--1.33
Expected beta in 1 year's time:
0.856
Expected beta in 3 year's time:
1.211
Unlevered (debt free) Beta:
1.316
Beta in relation to Nasdaq (XNAS):
1.025
Beta in relation to all global stocks::
0.791
Beta Comparison & Analysis
Beta of competitors/peers::
1.064
Beta is 25.21% higher than peers
Average Industry Beta:
1.224
Beta is 8.82% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
22.43%
Sustainable growth rate is -50.08% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.274
Alpha is 87.52% above industry average alpha yield
Alpha is 1743% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ANET
Equity cost of capital:
0.123
Equity cost of capital is 6.41% above industry mean WACC
Unlevered (without debt) cost of capital:
12.12%
Before-tax cost of debt:
13.22%
After-tax cost of debt:
10.44%
Overall debt rating:
Non-investment grade (junk/speculative grade
Weighted average cost of capital (WACC):
10.44%
WACC is 28.76% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$10.38
Revenue growth rate per share of (3Y):
8.59
Annual revenue growth rate is -33.42% below industry average
EPS:
$2.92
Expected Annual growth rate of EPS (3Y):
-2.24%
Expected future EPS growth rate is -110.62% lower than the Computer Hardware industry
Free cash flow (FCF) per share:
$2.94
-
-
Debt per share
$0.19
EBITDA per share
$3.58
Valuation Analysis Today of
ANET
P/E Ratio:
36.14
P/E Ratio of Competitors/Peers:
14.59
P/E ratio is 147.61% higher than main peers & is 169.55% higher than the industry
Stock price/value with industry average P/E ratio: $39.15
ANET is 199.65% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
11.3
Price to sales ratio is 300.56% above the industry mean
P/B (Price to book value ratio):
8.59
Price to free cash flow: 39.84
Price to free cash flow ratio is -51.70% lower than the industry
Net income growth rate (3Y):
152.11%
Net income growth rate is 64.95% higher than the average industry net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
1.38%
Net debt to equity ratio:
-13.91%
Debt to assets ratio:
0.94%
Net debt to assets ratio:
-9.46%
Debt-to-asset ratio is -98.47% below industry average
Ability to repay debt:
Interest coverage ratio:
143.57
Interest coverage ratio is 2810.65% more than industry average
Looking forward:
Debt growth rate:
-21.92%
Annual debt growth is -182% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.69
Statistical significance of correlation:
ANET has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.599
Stock price is 15.06% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.599
Correlation of price movement with Nasdaq (^IXIC):
0.016
Covariance of price movement with the market:
0.024
Kurtosis
8.92
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.878
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
ANET
Gross Profit Margin Ratio:
255%
Operating Profit Margin Ratio:
31.56%
Operating profit margin is 317.66% higher than the industry
Net Profit Margin Ratio:
255%
Effective Tax Rate:
9.66%
Effective tax rate is -40.14% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
22.46%
Return on equity (ROE) is 67.91% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
15.27%
Return on assets (ROA) is 104.66% higher than the industry
Financial Leverage:
1.0x
Current Ratio:
3.73
Current ratio is 61.43% above industry average
Cash Conversion Cycle (days):
49.5
Cash conversion cycle is -37.91% below industry average
The remaining useful life of property plant & equipment is: 9.4 years
Stock based compensation to net income ratio:
5.39%
In-depth Efficiency Analysis
Revenue generated per employee:
1.1M
Each employee generates 47% more revenue than industry average revenue per employee
EBITDA generated per employee:
364.5K
Each employee generates 257% more EBITDA than industry average revenue per employee
Profit generated per employee:
311.6K
Each employee generates 346% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
67.6K
Each employee generates 449% more free cash flow than industry average revenue per employee
Assets/Capital per employee
335.1K
Each employee generates 449% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 20.58%
Growth rate in R&D investment/expenditure is -1316.27% lower than the industry
Competitors/Peer firms of
ANET
HP INC. (XNYS:HPQ)
MOTOROLA SOLUTIONS, INC. (XNYS:MSI)
DELL TECHNOLOGIES INC. (XNYS:DELL)
Nokia Corporation (XNYS:NOK)
CLOUDFLARE, INC. (XNYS:NET)
KEYSIGHT TECHNOLOGIES, INC. (XNYS:KEYS)
SUNSTONE METALS LTD (XASX:STM)
PALANTIR TECHNOLOGIES INC. (XNYS:PLTR)
CORNING INCORPORATED (XNYS:GLW)
Current Analyst Ratings
Strong buy�21%
Buy�46%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.16B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.15B
2.01B
626.27M
90.76M
386.65M
295.89M
-
1.01B
7.60M
7.60M
50.77M
1.09B
996.43M
932.75M
1.03B
99.73M
932.75M
Statement of Cash Flow
Date:
Period:
13.09M
Differed Income Tax :
- 81822.00K
Stock Based Compensation :
50.28M
Change in Working Capital :
- 19737.00K
Accounts Receivables:
- 131861.00K
Other Working Capital:
187.19M
Other Non-Cash Items:
- 16932.00K
Net Cash Provided by Operating Activities:
217.14M
Investments in PP&E:
- 14876.00K
Net Acquisitions:
- 49301.00K
Purchases of Investments:
- 412614.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
635.03M
2.79B
3.42B
648.61M
694.22M
338.44M
5.11B
154.06M
216.92M
105.24M
38.63M
446.35M
41.82M
1.00B
-
6.11B
204.68M
-
-
778.44M
385.89M
1.37B
57.47M
132.17M
586.00M
-
1.96B
31.00K
2.59B
- 30501.0K
1.59B
March 31, 2022 at 6:00:00 AM
2.16B
4.15B
6.11B
2.83B
57.47M
- 577551.0K
404.18M
-
- 72615.00K
-
-
- 136228.00K
-
6.42M
- 129809.00K
- 481.00K
14.23M
639.28M
625.05M
217.14M
- 14876.00K
202.26M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
ANET
2023
2024
2025
2026
2027
$116.08
$126.47
$137.79
$150.13
$163.57