Arista Networks, Inc. (ANET) Stock Analysis
Arista Networks, Inc. (ANET) Stock Analysis
Analysis from 10-Q filed 2025-11-05. Data as of Q4 2025.
Overall Grade: F (Concerning)
Arista Networks, Inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 28.9% | Above industry average |
| FCF Margin | 48.5% | Strong cash generation |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 28.9% suggests durable competitive advantages and efficient capital allocation.
Explore Arista Networks, Inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Arista Networks, Inc. earns 28.9% ROIC, Top 10% in Technology
Arista Networks, Inc.'s trailing-twelve-month ROIC of 28.9% ranks Top 10% in Technology companies (sector median: 5.3%), driven by NOPAT margin of 35.4% combined with asset turnover of 0.5x. Source: 10-Q filed 2025-11-05. Gross margin of 64.1% with operating margin at 42.8% reflects strong pricing power.
| Metric | ANET | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.9% | Excellent | Above sector median of 5.3% |
| Return on Equity (ROE) | 31.8% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 64.1% | Excellent | Strong pricing power |
| Operating Margin | 42.8% | Excellent | Efficient operations |
Cash Flow: Arista Networks, Inc. generates $4.4B FCF at 48.5% margin, positive NaN/8 quarters
Arista Networks, Inc. generated $4.4B in free cash flow (TTM), a 48.5% FCF margin, a margin that ranks Top 5% in Technology. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-05.
| Metric | ANET | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 48.5% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $4.4B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: Arista Networks, Inc. at 0.0x leverage
Arista Networks, Inc.'s debt-to-equity ratio of 0.0x reflects conservative leverage. Source: 10-Q filed 2025-11-05.
| Metric | ANET | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Valuation: Arista Networks, Inc. trades at 46.8x earnings
Arista Networks, Inc. trades at a P/E of 46.8x. Free cash flow yield of 2.7% reflects market expectations for growth.
| Metric | ANET | Rating | Context |
|---|---|---|---|
| P/E Ratio | 46.8x | Adequate | Premium valuation |
| EV/Sales | 17.3x | Warning | Growth premium priced in |
| FCF Yield | 2.7% | Adequate | Lower cash yield |
Capital Allocation: Arista Networks, Inc. returns 1.0% shareholder yield
Arista Networks, Inc.'s total shareholder yield is 1.0% (dividends + buybacks 1.0%). Source: 10-Q filed 2025-11-05.
| Metric | ANET | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 1.0% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 1.0% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $1.6B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.9% | Top 10% | 5.5x above |
| Free Cash Flow Margin | 48.5% | Top 5% | 5.4x above |
| Gross Margin | 64.1% | Top 50% | 1.2x above |
| Operating Margin | 42.8% | Top 5% | 9.0x above |
| Return on Equity (ROE) | 31.8% | Top 25% | 6.2x above |
| P/E Ratio | 46.8x | N/A | - |
Financial Scorecard
| Metric | ANET | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.9% | Excellent | Top 10% of sector (median: 5.3%) |
| Free Cash Flow Margin | 48.5% | Excellent | Top 5% of sector (median: 9.0%) |
| Gross Margin | 64.1% | Excellent | Top 50% of sector (median: 51.6%) |
| Debt to Equity Ratio | 0.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 46.8x | Adequate | High expectations priced in |
| Free Cash Flow Yield | 2.7% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is Arista Networks, Inc.'s Return on Invested Capital (ROIC)?
Arista Networks, Inc. (ANET) has a trailing twelve-month Return on Invested Capital (ROIC) of 28.9%. This compares above the sector median of 5.3%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Arista Networks, Inc.'s Free Cash Flow Margin?
Arista Networks, Inc. (ANET) has a free cash flow margin of 48.5%, generating $4.4 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is Arista Networks, Inc. stock overvalued or undervalued?
Arista Networks, Inc. (ANET) trades at a P/E ratio of 46.8x, which is above the sector median of N/A. The EV/Sales multiple is 17.3x. Free cash flow yield is 2.7%, reflecting growth expectations priced into the stock.
Q: What is Arista Networks, Inc.'s revenue and earnings growth?
Arista Networks, Inc. (ANET) grew revenue by 28.6% year-over-year. Earnings per share increased by 23.8% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is Arista Networks, Inc. buying back stock?
Arista Networks, Inc. (ANET) repurchased $1.6 billion of stock over the trailing twelve months. This represents a buyback yield of 1.0%.
Q: How does Arista Networks, Inc. compare to competitors in Technology?
Compared to other companies in Technology, Arista Networks, Inc. (ANET) shows: ROIC of 28.9% is above the sector median of 5.3% (Top 8%). FCF margin of 48.5% exceeds the sector median of 9.0% (Top 0% of sector). Gross margin at 64.1% is 12.4 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with Arista Networks, Inc.?
Arista Networks, Inc. (ANET) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-05. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.