Bert on ANET

Investment Analysis Clubs Saul’s Investing Discussions
1

Bert put up an article on Arista.

https://seekingalpha.com/article/4211743-arista-networks-tim…

He thinks the growth rates will re-accelerate in 2019 to 30%.

I’ve posted on this before, but I think Bert is right on. I expect growth rates, starting in the 4th quarter of this year, to go back to the mid 30’s.

Here are the quarterly revenue growth rates in %.

2015 53 42 40 42
2016 35 37 33 34
2017 39 51 51 43
2018 41 28

If it continues on the same track, expect about 26-28% this upcoming quarter, and then back to mid 30’s the next, because of the comparisons from last year.

I don’t think growth has slowed, just tough comparisons in Q2 and Q3.

The key for me is what will management say on the next conference call? Will they forecast growth accelerating back into the 30’s? If so, the stock could start to head higher with the improved guidance.

Anet has taken a hit recently, and I think it is a good time to add, which I have done in the last week.

Jim
long ANET

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I thought this was a great article.

He confirmed a lot of things I already knew, and uncovered some things I was unaware of (like ANET not being as hard-hit by trade-wars as CSCO!)

The one thing I’m concerned with, though, as I mentioned on the ANET board, is the 15% of their revenue that is attributed to MSFT.

While I don’t think MSFT will be pulling any business, I would like to see that 15% decrease, while simultaneously the actual $ figure increases. This would be a sign that:

  • MSFT is increasing it’s spendings
  • Other customers are also increasing their spending
  • New accounts are being added

So, I guess, “concerned” is possibly not the right adjective. I’m watching that number and wanting it to decrease as an indicator of growth.

–
Paul

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Paul,

Are you aware of the nine figure DoD contract award? As they sign more government contracts Microsoft should diminish its weighing considerable.

Denny Schlesinger

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Hey Denny,

Are you aware of the nine figure DoD contract award?

You betcha!

Which is a great sign! And if they begin increasing their sales within the government, I would certainly expect to the MSFT weight decrease!

Thanks.

Paul

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