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Arista (ANET) to Report Q2 Earnings: Is a Beat in the Offing?

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Arista Networks, Inc. ANET is scheduled to report second-quarter 2021 results on Aug 2, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 5% with the bottom line surpassing the Zacks Consensus Estimate by 12 cents. Arista delivered a trailing four-quarter earnings surprise of 6.1%, on average.

The Santa Clara, CA-based cloud networking company is anticipated to have recorded higher revenues on a year-over-year basis, supported by overall healthy demand for cloud networking solutions. However, due to COVID-19 hardships, Arista might have experienced some supply-chain challenges resulting in extended lead time and constrained shipments, thereby hampering its operational momentum.

Factors at Play

During the second quarter, Arista announced the launch of CloudVision 2021 for modern enterprises. It is a turnkey solution for network-wide workload orchestration and workflow automation. In today’s world, enterprise network teams have to adjust their method for rolling out network services to meet changing business needs. CloudVision 2021 offers innovative ways to solve end-user requirements using artificial intelligence, cloud and networking technologies.

The solution provides an operational model across domains to help enterprises simplify network operations by breaking down traditional network management silos. It is offered as an on-premises appliance or as a Software-as-a-Service-based application. CloudVision 2021 focuses on Arista’s cognitive campus solution with features that link user and application experience to network deployments. It delivers new automation capabilities that improve network agility while supporting business operations. These capabilities are likely to have translated into accretive revenues in the to-be-reported quarter.

Arista also unveiled SwitchApp, a full-featured 1/10/40G Layer 2/3 switching application that operates on Arista’s 7130 line of programmable FPGA switches. It is incorporated in Arista Extensible Operating System and delivers ultra-low latency supported by a single operating system. This superior solution facilitates trading and financial services firms to better respond to evolving market conditions while enabling clients to seamlessly enjoy a first-hand access to financial markets, thanks to this avant-garde switch technology. This is likely to be reflected in the upcoming results.

Management expects to witness continued growth within Enterprise customers with strength in adjacencies, software and services. For the June quarter, the Zacks Consensus Estimate for revenues is pegged at $687 million, indicating a 27% increase from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at $2.55, which suggests an improvement of 20.9% from $2.11 recorded in the year-earlier quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Arista this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.90%, with the former pegged at $2.57 and the latter at $2.55. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Arista Networks, Inc. Price and EPS Surprise

Arista Networks, Inc. Price and EPS Surprise
Arista Networks, Inc. Price and EPS Surprise

Arista Networks, Inc. price-eps-surprise | Arista Networks, Inc. Quote

Zacks Rank: Arista currently has a Zacks Rank #3.

Other Stocks to Consider

Here are some companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Continental Resources, Inc. CLR is slated to release second-quarter 2021 results on Aug 2. It has an Earnings ESP of +4.62% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcBest Corporation ARCB is scheduled to release second-quarter 2021 results on Aug 2. The company has an Earnings ESP of +3.15% and sports a Zacks Rank #1, at present.

Bruker Corporation BRKR has an Earnings ESP of +2.50% and a Zacks Rank of 2. The company is set to report second-quarter 2021 results on Aug 2.


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