How To Trade ANET Stock Ahead of Its Earnings?

Arista Networks (NYSE:ANET) is scheduled to report its earnings on Tuesday, May 6, 2025. Traditionally, ANET stock has exhibited a pattern of positive one-day returns after earnings announcements. Over the last five years, ANET has recorded a positive one-day return in 60% of instances, achieving a median gain of 6.1% and a maximum single-day positive return of 20.4%.

For traders focusing on events, grasping these historical trends could provide a possible edge, although the actual market response will largely hinge on how the reported results align with consensus estimates and market expectations. There are two main strategies to consider:

• Pre-Earnings Positioning: Evaluate the historical likelihood of positive post-earnings returns and take a position prior to the announcement.
• Post-Earnings Correlation Analysis: Investigate the historical relationship between immediate and medium-term stock performance following earnings releases and position accordingly.

At present, consensus estimates suggest that Arista will report earnings of $0.59 per share on revenue of $1.97 billion. This indicates growth compared to the same quarter last year when the company reported earnings of $0.50 per share on revenue of $1.57 billion. The projected growth is bolstered by the increasing adoption of artificial intelligence and the growth of data center infrastructure, which are anticipated to keep propelling Arista’s business.

From a fundamental perspective, Arista Networks currently has a market capitalization of $111 billion. Its revenue over the past twelve months totaled $7.0 billion, and the company showcased substantial operational profitability, with $2.9 billion in operating profits and a net income of $2.9 billion.

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ANET Stock Historical Likelihood Of Positive Post-Earnings Return

Here are some insights regarding one-day (1D) post-earnings returns:

• There have been 20 earnings data points recorded over the last five years, with 12 positive and 8 negative one-day (1D) returns observed. In summary, positive 1D returns were noted approximately 60% of the time.
• However, this percentage falls to 55% when considering data from the last 3 years rather than 5.
• The median of the 12 positive returns is 6.1%, while the median of the 8 negative returns is -6.0%

Additional information regarding observed 5-Day (5D), and 21-Day (21D) returns post earnings is compiled along with the statistics in the table below.

ANET Stock Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not effective if the correlation is low) is to grasp the correlation between short-term and medium-term returns post earnings, identify a pair that demonstrates the highest correlation, and execute the appropriate trade. For instance, if 1D and 5D indicate the highest correlation, a trader can adopt a “long” position for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data derived from 5-year and 3-year (recent) history. Note that the correlation 1D_5D denotes the correlation between 1D post-earnings returns and subsequent 5D returns.

Is There Any Correlation of ANET Stock With Peer Earnings?

Occasionally, the performance of peers can impact the post-earnings reaction of a stock. In fact, the pricing-in may commence before the earnings are disclosed. Below is historical data on the past post-earnings performance of Arista Networks stock compared with the stock performance of peers that announced earnings just prior to Arista Networks. For a fair comparison, peer stock returns also reflect post-earnings one-day (1D) returns.

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