As of June 3, 2025, Arista Networks Inc has a Discounted Cash Flow (DCF) derived fair value of $160.55 per share. With the current market price at $89.78, this represents a potential upside of 78.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $121.41 |
| DCF Fair Value (10-year) | $160.55 |
| Potential Upside (5-year) | 35.2% |
| Potential Upside (10-year) | 78.8% |
| Discount Rate (WACC) | 5.9% - 7.6% |
Revenue is projected to grow from $7003 million in 12-2024 to $19944 million by 12-2034, representing a compound annual growth rate of approximately 11.0%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 7003 | 20% |
| 12-2025 | 8304 | 19% |
| 12-2026 | 9566 | 15% |
| 12-2027 | 11343 | 19% |
| 12-2028 | 12772 | 13% |
| 12-2029 | 14453 | 13% |
| 12-2030 | 15838 | 10% |
| 12-2031 | 17137 | 8% |
| 12-2032 | 18090 | 6% |
| 12-2033 | 18994 | 5% |
| 12-2034 | 19944 | 5% |
Net profit margin is expected to improve from 41% in 12-2024 to 48% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 2852 | 41% |
| 12-2025 | 3465 | 42% |
| 12-2026 | 4132 | 43% |
| 12-2027 | 5058 | 45% |
| 12-2028 | 5864 | 46% |
| 12-2029 | 6818 | 47% |
| 12-2030 | 7509 | 47% |
| 12-2031 | 8165 | 48% |
| 12-2032 | 8662 | 48% |
| 12-2033 | 9139 | 48% |
| 12-2034 | 9642 | 48% |
with a 5-year average of $38 million. Projected CapEx is expected to maintain at approximately 1% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 52 |
| 12-2026 | 57 |
| 12-2027 | 71 |
| 12-2028 | 89 |
| 12-2029 | 111 |
| 12-2030 | 126 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 67 |
| Days Inventory | 299 |
| Days Payables | 59 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 2777 | 417 | 61 | 596 | 1704 |
| 2026 | 4427 | 663 | 94 | 256 | 3415 |
| 2027 | 5436 | 811 | 112 | 506 | 4007 |
| 2028 | 6326 | 940 | 126 | 504 | 4756 |
| 2029 | 7380 | 1093 | 142 | 422 | 5723 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 121.41 | 35.2% |
| 10-Year DCF (Growth) | 160.55 | 78.8% |
| 5-Year DCF (EBITDA) | 87.42 | -2.6% |
| 10-Year DCF (EBITDA) | 114.79 | 27.9% |
Is Arista Networks Inc (ANET) a buy or a sell? Arista Networks Inc is definitely a buy. Based on our DCF analysis, Arista Networks Inc (ANET) appears to be significantly undervalued with upside potential of 78.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $89.78.