ARISTA NETWORKS INC (NYSE:ANET) Analysis: A CAN SLIM Standout with Strong Growth and Leadership

The CAN SLIM investment methodology, created by William O’Neil, integrates fundamental and technical analysis to find high-growth market leaders. This methodical process assesses companies using seven standards represented by the acronym: Current quarterly earnings growth, Annual earnings increases, New products or services, Supply and demand dynamics, Leadership status, Institutional sponsorship, and Market direction. Stocks satisfying these strict standards usually show solid earnings momentum, institutional support, and technical health during positive market periods.

Current Quarterly Performance

ARISTA NETWORKS INC (NYSE:ANET) shows outstanding current quarterly performance that fits the “C” standard in CAN SLIM:

• Quarterly EPS growth of 39.0% is well above the minimum 20% level
• Revenue growth of 30.4% is higher than the 25% requirement
• Both measures display increasing momentum from past trends

This solid quarterly performance shows the company is having good business momentum, a main factor CAN SLIM investors look for when finding stocks with near-term growth possibility. The large beats on both earnings and sales growth requirements indicate Arista is performing well in its market.

Annual Earnings Growth and Profitability

The “A” in CAN SLIM centers on maintained annual earnings growth, where Arista provides notable results:

• Three-year EPS growth rate of 46.9% is much higher than the 25% minimum requirement
• Return on Equity of 29.8% is in the top group of its industry
• Steady profitability over several years with widening margins

These measures show that Arista’s solid performance is not only a recent event but part of a maintained growth path. The excellent ROE shows efficient use of shareholder capital, while the notable three-year growth rate shows the company’s capacity to keep momentum beyond single-quarter increases.

Market Leadership and Relative Strength

Arista shows the leadership traits (“L”) that CAN SLIM emphasizes:

• Relative strength rating of 91.13 shows it performs better than 91% of all stocks
• Solid standing within the Communications Equipment industry
• Trading close to 52-week highs with good short and long-term trends

The company’s cloud networking solutions represent the “N” factor through new technology meeting modern data center requirements. Its platforms provide availability, agility, and security through modern networking solutions, placing it at the front of industry shifts toward cloud infrastructure and AI networking.

Financial Health and Institutional Support

Arista’s financial measures support the supply/demand (“S”) and institutional (“I”) standards:

• No debt outstanding offers financial adaptability
• Institutional ownership of 69.1% is within the preferred range
• Good liquidity with current ratio of 3.33 and quick ratio of 2.82

The balanced institutional ownership indicates potential for more institutional buying, while the absence of debt lowers financial risk. These elements combine to create positive supply/demand dynamics with restricted share float and solid institutional interest.

Technical and Fundamental Alignment

The technical analysis shows good alignment with CAN SLIM’s market direction concepts:

• Both short-term and long-term trends stay positive
• Setup quality score of 9 shows good chart structure
• Trading in the higher range of its 52-week period

When paired with the fundamental analysis showing very good profitability and growth scores, Arista presents a strong case for CAN SLIM investors. The stock displays the typical mix of solid fundamentals with technical momentum that the methodology looks for.

Investment Considerations

While Arista meets most CAN SLIM standards well, investors should be aware of the high valuation with a P/E ratio of 56.76, which shows high growth expectations. The company’s position in cloud networking and AI infrastructure provides contact with long-term growth trends, but also requires continued performance to support current valuations. The solid institutional support and relative strength indicate market acknowledgment of these growth possibilities.

For investors looking for more CAN SLIM candidates, our pre-configured screener gives continuous finding of stocks meeting these strict standards. The screen regularly updates to show changing market situations and company performance.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consider their individual financial circumstances before making investment decisions. Past performance does not guarantee future results.