Company Overview
Arista Networks designs and sells networking equipment and related software used to build and run data networks. The business is geared toward high-performance switching and routing for large-scale environments. It sells into customers that need reliable, high-throughput network infrastructure. The company operates at a large public-company scale, with a market capitalization around USD 170.7 billion.
Analysis of recent data
FundamentalsFor the year ended December 31, 2025 (10-K), the company reported USD figures of revenue of USD 9.01 billion, EBIT of USD 3.86 billion, and net income of USD 3.51 billion. Year over year, revenue grew 28.6%, showing that the top line expanded sharply in the latest annual period.
Profitability was substantial in the trailing metrics, with a 64.06% gross margin, 42.82% operating margin, and 38.99% net profit margin. Depreciation and amortization was USD 72.6 million, and a free-cash-flow proxy (that excludes working-capital changes and uses an assumed tax rate) came out to about USD 3.19 billion. Cash on the balance sheet was USD 1.96 billion, while total debt was not provided.
Cash: USD 1.96 billion — the company is sitting on a meaningful cash balance; that matters because cash can absorb shocks and fund ongoing investment without forced financing. Total debt: not provided — without a debt figure, leverage can’t be pinned down; long term, that uncertainty matters because balance-sheet risk often shows up first in down cycles. ROE (TTM): 31.01% — a high return on equity points to strong earnings power relative to the equity base; over time, that can compound value if it’s not built on hidden leverage. Operating margin (TTM): 42.82% — a large portion of revenue is translating into operating profit; sustained operating efficiency can self-fund growth and keep the balance sheet liquid. Beta: 1.46 — the stock has tended to move more than the market; higher volatility matters because it can force valuation swings even when fundamentals look stable.
Valuation
DCF / MultiplesAt a current price of USD 135.88, the DCF output spans a wide range from USD 73.39 in a weaker scenario to USD 151.27 in a middle outcome and USD 270.30 in a stronger outcome. The current price sits below the middle outcome, but well above the weaker case, so the valuation hinges on whether the business can keep producing results closer to the central-to-strong end of that range.
The pricing also embeds demanding earnings expectations on conventional multiples, with a P/E (TTM) of 48.24 and EV/EBITDA (TTM) of 41.45. With that starting point, the balance sheet profile matters: a net cash position would be a meaningful stabilizer, but total debt is not provided here.
Risks - Total debt and interest burden: not provided. - Cash flow sensitivity to investment and working capital: capex and working-capital changes are not included in the FCFF proxy, so realized free cash flow could differ materially.
Catalysts - Continued revenue expansion: 28.6% year-over-year revenue growth in the latest annual period can lift intrinsic value if it converts to durable cash generation. - Sustained high profitability: a 42.82% operating margin (TTM) leaves room for funding operations internally and building cash over time.
Conclusion
TakeawayThis looks like something to watch closely, not a simple bargain. The price leans on results staying closer to the mid-to-strong valuation outcomes. The cleanest support is the company’s cash position and very high profitability. The biggest swing factor is whether cash generation holds up once the full investment and funding picture is clear.