Good call as usual Duma. In case you missed it, and you have if not perusing the often off-topic but always interesting New Paradigm board, Duma has been on fire the last 18 months or so!
As for Arista, my statement that “analyst will have to raise their estimates after this quarter” has come true, and to a much greater extent than I imagined, given how conservative analysts have been.
On Yahoo! analyst estimates have gone way up with the low at $7.05 in earnings to a high of $9.42 with an average of $8.25.
This gives a forward PE using the current share price, unadjusted for net cash that will not be burned (as is the more proper way to do things) is 29. Adjusted for cash, that should be (conservatively, simply using free cash flow for this year) more than 12% of Arista’s market cap, is a 25 p/e, p/e of 22. A bit more than using the free cash flow calculations, but seems rather incongruently inexpensive for a company of this quality and growth rate. I will not address reasons as to why this may or may not be or if it even means anything at all at the moment.
I am breaking my no post until Sunday rule. Dang boredom while waiting for things!
Yes, you are correct. I noticed that myself but did not change anything because the 2019 earnings look suspiciously like what is much more likely for 2018. 40% earnings growth from 2017, is $7.85. Looking at the growth numbers for 100 GB, which Arista is the market leader w 27% share, perhaps higher in 2018 (I have heard numbers as high as 50%, so I guess the numbers depend on where you hear it, so I will stick with 27%) is faster growth than the 40% growth in earnings imply (Arista still tends to grow earnings faster than revenue growth, and Q1, should they meet or exceed guidance will be at least 40% growth).
So the $7.64 high estimate is absurdly low for a high estimate, $8.13 for 2019 is much closer to this moderate number.
But yes, initially I assumed it was for fiscal year 2018 (like Nvidia’s earnings are) because although the numbers went up, they were absurdly low unless they are low balling revenue growth below guidance of 25% + or - per quarter after Q1, and they assume Arista will experience materially declining margins (which may happen as operating margins of 36% is not likely to be bettered, and sales and marketing expenses might increase with trying to make more enterprise sales) but I disagree that growth will fall below 25% for the year and that margins will materially fall for the year.
Now I will really take my posting and probably perusing vacation and avoid any future times of boredom while waiting for things. Maybe pleasant conversation with others.
But yes, initially I assumed it was for fiscal year 2018 (like Nvidia’s earnings are) because although the numbers went up, they were absurdly low unless they are low balling revenue growth below guidance of 25%
27% is the topline average growth estimate for 2018.
Bullish analysts do not lowball their estimates, for obvious reasons. Of course, they may be wrong!
Yes, I think I will follow it in the future. Maybe extend it some, buy half at 3 days half a bit later .That is for companies where I think selling is overdone
If it’s really bad core news I sell quickly.
I’m not sure what the best time is to buy on fundamental good news. Maybe wait a while, good news spreads slower than bad news, and initial market reaction is sometimes bad on good news. You never know the real earnings expectations (compared to raw published analyst reports) until you see the actual price reaction .