Time to Buy Arista Networks (ANET) Stock After 4-1 Split?

Core Viewpoint - Arista Networks has been a top-performing tech stock, with its shares more than doubling since 2023, leading to a 4-1 stock split aimed at making shares more accessible to a broader base of investors [1][5]. Financial Performance - Arista's strong financial performance and market leadership have driven its stock success, particularly through its focus on AI infrastructure and high-speed networking for AI-driven data centers [3][4]. - The company has consistently surpassed the Zacks EPS Consensus since going public in 2014 and has exceeded sales estimates for 20 consecutive quarters, with an average EPS surprise of 14.77% in the last four quarters [5]. Valuation and Balance Sheet - Following the stock split, Arista is trading at around 48X forward earnings, with a share price of $106, down from over $400 [5]. - Despite an 80% year-to-date rally, Arista's valuation is not overly stretched compared to the S&P 500 and its industry average of 25X, trading similarly to Nvidia's 49.5X forward earnings multiple [6]. - The company expects total sales to increase over 17% in fiscal 2024 and 2025, projecting sales to approach $8 billion [7]. Cash Position - Arista's cash and equivalents have increased significantly to $7.42 billion at the end of Q3 2024, up from $2.72 billion in 2019, with total assets of $12.84 billion against total liabilities of $3.6 billion [9]. Earnings Estimates - Annual earnings are expected at $2.18 per share in FY24, up from $6.94 last year, with FY25 EPS projected to increase by 10% to $2.39 [9][10]. - Recent positive revisions in earnings estimates reflect the company's strong performance, with current estimates for FY24 and FY25 showing upward trends [11]. Conclusion - Following the stock split, Arista Networks holds a Zacks Rank 2 (Buy), indicating that the stock is more affordable and has potential for further upside [12].