Arista Networks Inc (NYSE:ANET) Fits Louis Navellier’s High-Growth Stock Criteria with Strong Fundamentals and Momentum

Investors looking for high-growth stocks frequently use systematic screening methods to find companies with solid fundamentals and positive momentum. One approach detailed in Louis Navellier’s The Little Book That Makes You Rich highlights eight key factors for choosing top growth stocks. These factors include upward earnings revisions, strong sales and earnings growth, improving margins, healthy cash flow, and high return on equity. The method targets firms showing faster profitability and rising analyst confidence, traits often linked to long-term stock price gains.

Arista Networks Inc (NYSE:ANET) stands out as a strong fit for this strategy, matching several of Navellier’s criteria. Here’s how the company aligns with the method’s main points:

1. Upward Earnings Revisions and Surprises

A key part of Navellier’s strategy is rising earnings estimates, which point to better business prospects. Arista Networks has had its next-quarter EPS estimates raised by 7.7% over the last three months, showing analyst confidence. The company has also reported four straight positive earnings surprises in its past four quarters, with an average beat of 10.7%. Steady outperformance often leads analysts to adjust future estimates, which can push stock prices higher.

2. Faster Revenue and Earnings Growth

Growth investors favor firms with increasing sales and profits. Arista’s revenue rose 25.97% year-over-year (TTM), while quarterly sales climbed 30.43% compared to the same quarter last year. Similarly, EPS grew 31.5% year-over-year, with the most recent quarter showing a 39.05% increase—a sign of faster earnings growth. These figures suggest the company is capturing market share and operating efficiently.

3. Improving Operating Margins and Healthy Cash Flow

Rising profitability is vital for maintaining growth. Arista’s operating margin improved by 4.63 percentage points over the past year, reaching 43.14%—well above industry averages. This indicates effective cost control alongside revenue growth. The company also saw a 320.65% rise in free cash flow over the last year, giving it plenty of funds for reinvestment or shareholder returns.

4. High Return on Equity (ROE)

Navellier emphasizes ROE as a gauge of how well a company generates profits from shareholder investments. Arista’s ROE of 29.83% ranks among the best in its industry, showing efficient use of capital and a strong competitive position.

Financial Health and Valuation

Arista’s fundamental analysis report highlights its solid financial condition, with top scores for profitability (9/10) and solvency (9/10). The firm has no debt and leads its sector in margins. However, its valuation is high, with a P/E of 52.77—a premium for its growth potential. While costly compared to the S&P 500, Arista’s earnings growth and industry leadership may make the premium worthwhile for growth-focused investors.

Conclusion

Arista Networks fits Navellier’s strategy well, with faster fundamentals, rising estimates, and strong profitability. For investors searching for similar high-growth options, the Little Book screener provides a list of stocks meeting these strict criteria.

Disclaimer: This article is not investment advice. Conduct thorough research or consult a financial advisor before making investment decisions.