Arista Networks Inc (NYSE:ANET) Excels in Growth Screening Based on Navellier's Strategy

In the world of growth investing, few strategies have received as much notice as the one detailed in Louis Navellier’s "The Little Book That Makes You Rich." The approach highlights eight main rules made to find companies with outstanding growth promise, concentrating on measures like earnings revisions, sales acceleration, margin expansion, and profitability. By using these rules in a structured way, investors try to find stocks set for continued strong performance. One company that recently appeared from this screening process is Arista Networks Inc (NYSE:ANET).

Strong Fundamentals and Growth Metrics

Arista Networks shows solid agreement with Navellier’s growth-focused ideas, especially in parts like earnings momentum and operational effectiveness. The company’s latest financial results show several of the main screening rules:

• Positive Earnings Revisions: Analyst EPS estimates for the next quarter have been moved up by 14.66% over the last three months, showing increasing belief in near-term profitability.
• Consistent Earnings Surprises: The company has beaten earnings predictions in each of the previous four quarters, with an average beat of 10.73%, showing a habit of outperforming estimates.
• Accelerating Sales and Earnings:
  • Revenue growth year-over-year is at 25.97%, while quarterly sales growth is 30.43%.
  • EPS growth has been similarly notable, with a 31.50% rise over the past year and a 39.05% increase in the latest quarter compared to the same time last year.

These numbers are important within Navellier’s structure because they point out a company’s skill to not just grow, but to do so at a quickening rate, which frequently connects with market outperformance.

Profitability and Efficiency

Another part of the "Little Book" strategy includes judging profitability and operational performance. Arista Networks does very well here too, with growing margins and high returns on capital:

• Operating margin growth got better by 4.63% over the past year, showing the company’s skill to turn higher revenue into profits effectively.
• Return on equity (ROE) is at 29.83%, much higher than the minimum 10% level highlighted in Navellier’s approach, showing good use of shareholder capital.
• Free cash flow growth jumped by 320.65% year-over-year, highlighting financial flexibility and the ability to self-fund future growth.

These measures are important because they indicate a well-managed business with lasting economics, a sign of companies that can provide long-term growth.

Valuation and Industry Context

While the company’s valuation multiples seem high compared to wider market indices, this is often common for high-growth firms. Arista works in the competitive communications equipment industry, where new ideas and market leadership can support premium pricing. The company’s exceptional profitability scores and growth path suggest it might keep such valuations, particularly if performance stays strong.

According to ChartMill’s fundamental analysis report, Arista Networks has an overall rating of 7 out of 10, with very high scores in health and profitability. The report mentions outstanding margins, strong returns on invested capital, and a clean balance sheet with no debt. These qualities match well with the quality-focused parts of growth investing.

Suitability for Growth Investors

Arista Networks represents the kind of company Navellier’s strategy aims to find: one with strong momentum, getting better fundamentals, and high profitability. For investors using a growth-focused approach, the stock is an interesting candidate based on both quantitative screening outcomes and qualitative execution.

It is important to note that the present bullish trends in the S&P 500, both short- and long-term, might offer a supportive environment for high-growth names like Arista, although investors should stay aware of wider market conditions.

For those wanting to look into other companies that fit similar rules, more screening results based on Navellier’s "Little Book" approach can be found through this custom screen.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation and risk tolerance before making investment decisions.