Will Solid Top-Line Improvement Aid Arista's (ANET) Q4 Earnings?
Arista Networks, Inc. ANET is set to release fourth-quarter 2023 results on Feb 12, after the closing bell. The company delivered a trailing four-quarter earnings surprise of 12%, on average. In the last reported quarter, it pulled off an earnings surprise of 15.82%, with the bottom line surpassing the Zacks Consensus Estimate by 25 cents. The company is expected to record higher revenues year over year, backed by healthy traction for its cloud networking solutions and product innovation.
Factors at Play
During the quarter, Arista announced the launch of the cutting-edge 7130 Series for ultra-low latency switching that accelerates 25G networking. The Arista 7130 series 25G solution suit effectively supports low latency applications and offers backward compatibility with existing 10G solutions. It allows customers to seamlessly upgrade networks to 25G Ethernet, reduces the impact of microbursts and minimizes queuing delays.
In the to be reported quarter, Arista has introduced an expanded zero-trust networking architecture that leverages underlying network infrastructure to enhance security measures, streamline workflows and establish an integrated zero-trust program. The company extended its collaboration with Zscaler to accelerate customers’ zero-trust journey. The solution features Arista CloudVision AGNI, which ensures secure onboarding and troubleshooting for users and devices. It also utilizes Autonomous Virtual Assist powered by AI-ML capabilities to enhance visibility and augment threat detection. These developments are likely to have a positive impact on fourth quarter results.
The Zacks Consensus Estimate for total product revenues is pegged at $1.3 billion suggesting an improvement from $1.09 billion in year earlier quarter. Our estimate for service revenues stands at $229.01 million, indicating an improvement from $178.69 million reported in the year-ago quarter.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $1.53 billion, indicating an increase from the year-ago quarter’s reported figure of $1.27 billion. Adjusted earnings per share stands at $1.71, which suggests an improvement from $1.41 recorded in the year-earlier quarter.
Earnings Whispers
Our proven model does not conclusively predict 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.91%. The Most Accurate Estimate is pegged at $1.69 while the Zacks Consensus Estimate stands at $1.71. 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-eps-surprise | Arista Networks, Inc. Quote
Zacks Rank: Arista currently sports a Zacks Rank #1.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
InterDigital, Inc. IDCC is set to release quarterly numbers on Feb 15. It has an Earnings ESP of +1.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Shopify SHOP is +1.02% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Feb 13.
The Earnings ESP for Watts Water Technologies WTS is +0.87% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 12.
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