Value
2.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.0 |
| P/S | 0.0 |
| Fwd P/E | 2.8 |
| PEG | 4.7 |
| Analyst target | 5.0 |
- ▸Forward P/E: 38.3x
- ▸PEG: 1.81
- ▸Expensive valuation
ANET · Why this verdict
Why Arista Networks (ANET) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Arista Networks is a wide-moat, high-quality business compounding at 35% revenue growth with a perfect Piotroski score, four consecutive earnings beats, and strong operating margins — but the stock has reached the near-term analyst target, trades at a forward multiple of 38x, and the current setup rewards patience over immediate entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing at 35% year over year, placing the company firmly among the fastest-growing large-cap technology franchises. Earnings growth accompanies revenue growth, and the four-quarter beat streak with an average 8.8% positive surprise indicates the company is executing above even its own guidance. Growth breakdown | Revenue growth stays above 20% year over year for 2 consecutive quarters. | ↑Improving |
| CounterGrowth at this rate is already embedded in a 38x forward multiple and a PEG above 2; if growth decelerates toward the mid-teens — even while remaining healthy — multiple compression could offset earnings gains and produce flat or negative returns. | ||
The business earns a wide economic moat designation supported by a 32% return on equity, 38% operating margins, and a perfect Piotroski F-Score of 9 out of 9. These metrics collectively describe a franchise that consistently generates returns well above its cost of capital. Quality breakdown | Operating margin stays above 30% and return on equity remains above 25% for 4 consecutive quarters. | →Stable |
| CounterAt a forward multiple of 38x, the market has already priced in sustained superiority; any compression in margins or return profile — even to merely good rather than exceptional — would likely produce a meaningful multiple de-rating. | ||
The stock is trading within roughly 0.7% of the analyst consensus price target, leaving minimal near-term upside at current prices. The setup favors accumulating on weakness toward the entry support level around $141 rather than chasing at current levels. Warnings | The stock pulls back to the $141–$150 range, restoring upside to the take-profit target above 10% from entry. | Tripped↑Improving |
| CounterWide-moat businesses with a golden cross and bullish MACD often continue higher as fundamental momentum overwhelms valuation caution; waiting for a pullback that never comes is a common cost of excessive price discipline on high-quality names. | ||
The put-to-call ratio stands at 2.28, well above neutral, indicating that options market participants are positioning more heavily for downside protection than for upside participation. This hedging activity, combined with implied volatility near 62%, reflects meaningful uncertainty about near-term price direction. Risk breakdown | The put-to-call ratio compresses below 1.5 over the next quarter as the stock re-establishes direction. | ↑Improving |
| CounterElevated put activity in a high-beta technology name often reflects institutional hedging of existing long positions rather than outright bearish bets; the presence of heavy put hedging alongside a perfect momentum setup does not necessarily forecast a decline. | ||
Revenue is growing at 35% year over year, placing the company firmly among the fastest-growing large-cap technology franchises. Earnings growth accompanies revenue growth, and the four-quarter beat streak with an average 8.8% positive surprise indicates the company is executing above even its own guidance.
↑ImprovingGrowth breakdown
- Expectation
- Revenue growth stays above 20% year over year for 2 consecutive quarters.
CounterGrowth at this rate is already embedded in a 38x forward multiple and a PEG above 2; if growth decelerates toward the mid-teens — even while remaining healthy — multiple compression could offset earnings gains and produce flat or negative returns.
The business earns a wide economic moat designation supported by a 32% return on equity, 38% operating margins, and a perfect Piotroski F-Score of 9 out of 9. These metrics collectively describe a franchise that consistently generates returns well above its cost of capital.
→StableQuality breakdown
- Expectation
- Operating margin stays above 30% and return on equity remains above 25% for 4 consecutive quarters.
CounterAt a forward multiple of 38x, the market has already priced in sustained superiority; any compression in margins or return profile — even to merely good rather than exceptional — would likely produce a meaningful multiple de-rating.
The stock is trading within roughly 0.7% of the analyst consensus price target, leaving minimal near-term upside at current prices. The setup favors accumulating on weakness toward the entry support level around $141 rather than chasing at current levels.
Tripped↑ImprovingWarnings
- Expectation
- The stock pulls back to the $141–$150 range, restoring upside to the take-profit target above 10% from entry.
CounterWide-moat businesses with a golden cross and bullish MACD often continue higher as fundamental momentum overwhelms valuation caution; waiting for a pullback that never comes is a common cost of excessive price discipline on high-quality names.
The put-to-call ratio stands at 2.28, well above neutral, indicating that options market participants are positioning more heavily for downside protection than for upside participation. This hedging activity, combined with implied volatility near 62%, reflects meaningful uncertainty about near-term price direction.
↑ImprovingRisk breakdown
- Expectation
- The put-to-call ratio compresses below 1.5 over the next quarter as the stock re-establishes direction.
CounterElevated put activity in a high-beta technology name often reflects institutional hedging of existing long positions rather than outright bearish bets; the presence of heavy put hedging alongside a perfect momentum setup does not necessarily forecast a decline.
Per-dimension breakdown
Quality
9.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 9.4 |
| Gross margin | 8.6 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 9.9 |
| FCF quality | 6.8 |
| Moat | 8.0 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 31%
- ▸Strong margins: 38%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
9.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 9.1 |
- ▸Strong growth: 38% YoY
Momentum
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 5.1 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 9.0 |
| Price target | 7.1 |
| erm sentiment | 5.0 |
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $437,840,488 (0.175% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.2 |
| quality rank | 7.6 |
| growth rank | 5.0 |
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.8 |
| 52w position | 9.6 |
| gap | 4.0 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.4 |
| days to cover | 9.3 |
| volatility | 0.0 |
| put call | 6.5 |
| implied vol | 3.0 |
| beta | 4.6 |
- ▸High IV: 62%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Wide-moat business. Accumulate on weakness.
Engine technical detail
verdict_path:
L4:PATH_E_WIDE_MOAT|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (7)
- MOMENTUM:7.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (0)
none
Reward-to-Risk
0.23
Upside
+3.4%
Downside
15.0%
Sizing output
STARTER
SetupBreakout — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.61>1.3
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's 0.2<1.5@spot outcome against Growth at 9.6 and asymmetric R:R of 0.23.
The strongest dimensions are Growth at 9.6, Quality at 9.2, and Momentum at 7.8; the weakest are Value at 2.9, Technical at 3.6, and Peer rank at 4.7. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.23 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Compounder Quality
Trip ifOperating margin falls below 30% for 2 consecutive quarters.
- P2Exceptional Revenue Growth Trajectory
Trip ifRevenue growth falls below 20% year over year for 2 consecutive quarters.
- P3Analyst Target Reached Entry TimingTripped
Trip ifStock price rises above $185 without a pullback to the $141–$150 support zone, making entry at a favorable level unlikely.
- P4Elevated Put Options Activity
Trip ifPut-to-call ratio compresses below 1.5 for 2 consecutive months.