Arista Networks, Inc. (ANET): investment thesis checklist
What a value investor writing down why they own Arista Networks, Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 30.6% in FY2025; between 23.9% and 42.7% over 5 filed years, median 30.6%. Does the thesis need it to stay inside that range?
- Return on equity: 28.4% in FY2025; between 15.3% and 29.7% over 10 filed years, median 26.6%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 2.5% in FY2025; between 1.2% and 5.8% over 10 filed years, median 2.6%. Does the thesis need it to stay inside that range?
- EV to EBIT: 42.84x in FY2025; between 19.16x and 60.08x over 6 filed years, median 37.55x. Does the thesis need it to stay inside that range?
- Price to earnings: 47.65x in FY2025; between 19.11x and 54.66x over 10 filed years, median 41.37x. Does the thesis need it to stay inside that range?
- Gross margin: 64.1% in FY2025; between 61.1% and 64.5% over 10 filed years, median 64.0%. Does the thesis need it to stay inside that range?
- Operating margin: 42.8% in FY2025; between 12.7% and 42.8% over 10 filed years, median 32.4%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: -0.50x in FY2025; between -2.03x and -0.50x over 6 filed years, median -0.95x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 31.2% in FY2025; between 21.2% and 53.5% over 10 filed years, median 27.5%. Does the thesis need it to stay inside that range?
- Share count change: -0.4% in FY2025; between -1.8% and 7.9% over 9 filed years, median 0.2%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Arista Networks, Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Revenue Growth 1Y stays at or above 0%
Today 28.6%. Replayed over 9 filed years, it would have broken in 1; most recently FY2020, at -3.87% (10-K, filed 2021-02-19).
Current Ratio stays at or above 2.44x
Today 3.05x. Replayed over 10 filed years, it held in every one.
Return on Invested Capital stays at or above 24.5%
Today 30.62%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which revenue growth 1y fell below 0%.
- A filed year in which current ratio fell below 2.44x.
- A filed year in which return on invested capital fell below 24.5%.
4. The published tests it meets today
Of 30 tests value investors published: 1 met, 25 not met, 4 we could not complete. Counts, never a score.
Meets: ROIC at or above WACC.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.