Arista Networks’ (NYSE:ANET) 31% CAGR outpaced the company’s earnings growth over the same five-year period

When investing in stocks, there is always a risk of losing 100% of your investment. However, if you choose a company that is performing well, you have the potential to make more than 100% return. Arista Networks, Inc. (NYSE:ANET) is a great example of this, with its share price increasing by 280% over the past five years and up 7.6% in the last week.

In the past week alone, Arista Networks has added US$6.0 billion to its market cap. This raises the question of whether the company’s underlying performance has been driving long-term returns.

Over the past five years, Arista Networks has managed to grow its earnings per share at a rate of 43% per year. This growth rate is higher than the average annual increase in share price, which is 31%. This suggests that the market may not be as enthusiastic about the stock as it once was.

While it is impressive to see Arista Networks’ profit growth over the years, it is essential to consider the company’s future prospects. Shareholders should review a detailed report on the company’s balance sheet before making any investment decisions.

Looking at the company’s performance over the last twelve months, Arista Networks has rewarded shareholders with a total shareholder return of 65%. This is higher than the annual total shareholder return over five years, which is 31%. This positive sentiment around the company may indicate potential for further growth. Investors should closely monitor the stock’s momentum to avoid missing out on opportunities.

It is important to note that Arista Networks may not be the best stock to buy. Investors should explore other companies with past earnings growth and future growth forecasts to diversify their portfolio.

This article by Simply Wall St provides commentary based on historical data and analyst forecasts. It does not constitute financial advice or a recommendation to buy or sell any stock. Investors should consider their objectives and financial situation before making any investment decisions. Simply Wall St aims to provide long-term focused analysis driven by fundamental data.