Until recently, many people had probably never heard of it Arista Networks (NYSE: ANET ). Now, it is one of the hottest tickers in the market. The network company has had significant success in the business of routers, network switches, and similar hardware devices, and Wall Street is taking notice. The stock is beat S&P 500 Beautifully over the last 12 months, and the story looks set to continue.
There are a lot of tech stocks out there, and a ton of them have seen big gains in a short period of time. What I love about Arista is that networking and cloud computing are an integral part of modern technologies. This is an industry that is not going away.
Arista Networks is involved in developing networks for large enterprises through the use of cloud computing, routers, data centers and other digital resources. Networks are the infrastructure backbone for many companies, and the growing use of cloud computing bodes well for Arista’s future.
In particular, Arista prides itself on its extensible operating system. As the company notes, it is “the core of Arista cloud networking solutions for next-generation data centers and cloud networks.” The company has a great position in the cloud, and continues to innovate to stay ahead of the pack.
The success of the company is highlighted by its collaboration with companies like Meta platform. Meta AI is using Arista’s distributed EtherLink switches for clusters, and represents a continuation of the collaboration through 2018. This is just one example of the company’s ability and usefulness to leading companies. In total, Arista currently has 10,000 cloud customers worldwide.
The stock delivered nearly 100% returns last year, compared to an S&P 500 return of about 27%. More broadly, Arista has gained 817% over the past five years and is perfectly positioned in the industry.
Arista Networks has had three consecutive strong years, posting consecutive revenue growth rates of 27% in 2021, 48.6% in 2022, and 33.7% in 2023. Consistently, earnings also have significant growth rates. In fiscal 2021, diluted earnings per share grew 31.94%, 60.86% in 2022, and 54.01% in 2023. Revenue in 2024 rose 17.43% over the first three quarters, with diluted earnings per share of $36144%.
One of the things I really like about Arista is that it is a stock that can be viewed as a pure income stock. So many tech stocks trade at high multiples to earnings or have no earnings at all. But Arista Networks has evolved to the point of generating meaningful earnings for shareholders. The company ended the first nine months of the year with net income of $2.05 billion. This is a nearly 39% increase over the first nine months of last year.
