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Can Healthy Top-Line Growth Drive Arista (ANET) Q3 Earnings?

Zacks Equity Research

Arista Networks, Inc. ANET is scheduled to report third-quarter 2019 results after the closing bell on Oct 31. In the last reported quarter, the company delivered a positive earnings surprise of 9.9%, surpassing the Zacks Consensus Estimate by 22 cents. For the third quarter, the company is likely to have generated higher consolidated revenues on a year-over-year basis, supported by a healthy growth trajectory.

Factors at Play

During the quarter, Arista secured a contract from SYNNEX Corporation – a leading business process services firm – to address the burgeoning demand for large-scale networking solutions in the IT channel. This is likely to have boosted the company’s revenues in the quarter.

As part of its cognitive management plane framework, Arista also launched CloudVision 2019 during the quarter. This software platform is designed to bring cloud network operations to enterprise customers through automation, telemetry, and analytics solutions, thereby helping clients to reduce operational costs, manage risks and improve network agility. This is likely to have generated additional revenues for the company in the third quarter.

With solid demand for data center switches and continued spending on IT infrastructure products for deployment in cloud environments, Arista is likely to to have recorded healthy rise in revenues. The company expects third-quarter revenues in the range of $647 million to $657 million. The Zacks Consensus Estimate for the same is pegged at $653 million, indicating a 16% improvement from the year-ago reported number. The consensus estimate for earnings is currently pegged at $2.44 per share, up from $2.11 reported in the year-earlier quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Arista in the third quarter. 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 not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.07%. 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-eps-surprise | Arista Networks, Inc. Quote

Zacks Rank: Arista has a Zacks Rank #4 (Sell).

Stocks to Consider

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

Viavi Solutions Inc. VIAV is set to release quarterly numbers on Oct 30. It has an Earnings ESP of +6.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Ubiquiti Inc. UI is +1.18% and it carries a Zacks Rank of 3. The company is likely to report quarterly numbers on Nov 8.

The Earnings ESP for DHI Group, Inc. DHX is +9.09% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 7.

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