The stock of hardware networking company Arista Networks (ANET) has generated a return of 37% in the last 12 months. The stock has rebounded after losing 12.4% last year. Since the start of 2019, it’s up 55%.
Arista stock has generated returns of 412% in the last three years and 500% in the last five years. What drove ANET to record highs? The company saw its sales rise from $584 million in 2014 to $2.15 billion in 2018.
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Its revenue could reach close to $3.75 billion by 2021. Its EPS have risen at a CAGR (compound annual growth rate) of 51% in the last five years.
Arista stock is currently trading 0.6% below its 52-week high of $329.25 and 75% above its 52-week low of $187.08. With a relative strength index score of 71, Arista stock is trading well into oversold territory.
Is Arista stock overvalued?
Arista has a 2019 forward PE ratio of 40.0x. It stands at 33.8x for 2020. Analysts expect Arista’s sales to rise 23% in 2019 and 20% in 2020. Its EPS are expected to rise 16% in 2019 and 17% in 2021. Its EPS are expected to grow at a CAGR of 18.5% over the next five years.
Arista stock is valued at 9x its sales, and the stock seems overvalued at its current price.
Of the 25 analysts covering Arista Networks, 16 have given it “buy” recommendations, nine have given it “holds,” and none have given it “sells.” The average 12-month target price for Arista Networks is $303.72, which indicates a potential downside of 7% from its current level.