As of June 4, 2025, Arista Networks Inc's estimated intrinsic value ranges from $24.76 to $160.55 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $160.55 | +69.9% |
| Discounted Cash Flow (5Y) | $121.41 | +28.5% |
| Dividend Discount Model (Multi-Stage) | $60.31 | -36.2% |
| Dividend Discount Model (Stable) | $54.80 | -42.0% |
| Earnings Power Value | $24.76 | -73.8% |
Is Arista Networks Inc (ANET) undervalued or overvalued?
With the current market price at $94.50, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Arista Networks Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 1.07 |
| Cost of equity | 7.5% | 10.9% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 13.4% | 13.9% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.9% | 7.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $121 | $150,631M | 89.1% |
| 10-Year Growth | $161 | $199,793M | 80.2% |
| 5-Year EBITDA | $87 | $107,007M | 84.6% |
| 10-Year EBITDA | $114 | $141,272M | 72.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,942M |
| Discount Rate (WACC) | 7.6% - 5.9% |
| Enterprise Value | $25,569M - $32,927M |
| Net Debt | $(1,845)M |
| Equity Value | $27,414M - $34,772M |
| Outstanding Shares | 1,256M |
| Fair Value | $22 - $28 |
| Selected Fair Value | $24.76 |
| Metric | Value |
|---|---|
| Market Capitalization | $118684M |
| Enterprise Value | $116839M |
| Trailing P/E | 39.19 |
| Forward P/E | 34.25 |
| Trailing EV/EBITDA | 19.35 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 1.06 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $48.17 |
| Discounted Cash Flow (5Y) | 25% | $30.35 |
| Dividend Discount Model (Multi-Stage) | 20% | $12.06 |
| Dividend Discount Model (Stable) | 15% | $8.22 |
| Earnings Power Value | 10% | $2.48 |
| Weighted Average | 100% | $101.28 |
Based on our comprehensive valuation analysis, Arista Networks Inc's weighted average intrinsic value is $101.28, which is approximately 7.2% above the current market price of $94.50.
Key investment considerations:
Given these factors, we believe Arista Networks Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.