This is a step-by-step stock review to answer the question, is Arista Networks (ANET) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Arista Networks (ANET) stock a good buy?
- Arista Networks Company History
- MOS
- Meaning
- Moat
- Management
- 4M Score
- Is Arista Networks (ANET) stock a good buy?
1. Arista Networks Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founded: Arista Networks was founded in 2004 by Andy Bechtolsheim, David Cheriton, and Kenneth Duda.
- Initial Focus: The company initially focused on high-performance cloud networking solutions.
- Launch: Arista introduced its first product in 2008, an ultra-low-latency 10 Gigabit Ethernet switch.
- Expansion: Rapidly expanded its product line to include a range of 10/25/40/50/100 Gigabit Ethernet switches.
- IPO: Went public in 2014, trading on the New York Stock Exchange under the ticker symbol ANET.
- Innovations: Known for its pioneering Extensible Operating System (EOS), which provides advanced programmability and automation.
- Awards: Received numerous awards for innovation and performance, including recognition from Gartner as a leader in the Data Center Networking Magic Quadrant.
- Partnerships: Formed strategic partnerships with major tech companies like Microsoft, Amazon, and Google.
- Acquisitions: Acquired Mojo Networks in 2018, enhancing its capabilities in cloud-managed Wi-Fi.
- Financial Growth: Consistently reported strong financial performance, with significant revenue growth and profitability.
- Sustainability: Focuses on energy-efficient products and sustainable practices in its operations.
Arista Networks has established itself as a leader in cloud networking solutions through innovation, strategic partnerships, and consistent financial growth, making it a formidable player in the tech industry.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Watch
- Score: 95
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Arista makes money:
- Ethernet Switches: Sells high-performance Ethernet switches for data centers.
- Software Licenses: Charges for licenses of the Extensible Operating System (EOS) and other software.
- Cloud Networking Solutions: Provides cloud-based networking services.
- Hardware Sales: Sells networking hardware such as routers and transceivers.
- Technical Support Services: Offers technical support and maintenance services.
- Consulting Services: Provides network design and consulting services.
- Training and Certification: Runs training programs and certification courses for network professionals
- Big Switch Networks
- MoSys
- Pluribus Networks
- MetaCloud
- Arista’s acquisition of parts of Cisco’s business
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Arista Networks tacks up against other companies.
- Arista Networks, Inc.(ANET) – 95
- HP Inc.(HPQ)
- Dell Technologies Inc.(DELL) – 56
- Pure Storage, Inc.(PSTG) – 55
- Velo3D, Inc.(VLD) – 28
- Desktop Metal, Inc.(DM) – 22
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Revenue Growth:Jayshree Ullal Led Arista Networks to significant revenue growth, surpassing $2 billion in annual revenue.
- Market Leadership: Positioned Arista as a leader in data center and cloud networking solutions, competing effectively against larger incumbents.
- Product Innovation: Drove innovation with the development of Arista’s Extensible Operating System (EOS), a key differentiator in the market.
- IPO Success: Successfully took Arista Networks public in 2014, achieving a strong initial public offering (IPO).
- Customer Base Expansion: Expanded Arista’s customer base to include major tech companies, cloud providers, and enterprises globally.
- Strategic Acquisitions: Oversaw strategic acquisitions to enhance Arista’s technology portfolio and market reach.
- Operational Excellence: Maintained a strong focus on operational efficiency and excellence, contributing to consistent profitability and high gross margins.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Arista Networks (ANET) is 88/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Arista Networks (ANET) stock a good buy?
Some of the top questions investors can have is Arista Networks (ANET) stock a good buy or should I buy Arista Networks (ANET) stock?
Arista Networks is a compelling investment opportunity due to its leadership in network switching and cloud networking solutions. The company’s innovative products cater to high-demand sectors like data centers and cloud computing, which are rapidly growing. Arista’s strong financial performance, including consistent revenue growth and profitability, further supports its investment appeal. Its cutting-edge technology and commitment to R&D ensure it remains at the forefront of industry trends. However, potential investors should consider the competitive landscape and market volatility. Despite these risks, Arista’s strong market position and growth prospects make it a solid choice for those seeking exposure to the tech sector. Evaluate how it aligns with your investment strategy and risk tolerance.
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To truly know if Arista Networks is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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