Benzinga | Oct 30, 2020 11:05AM EDT

Arista Networks's Earnings Outlook

Arista Networks (NYSE: ANET) announces its next round of earnings this Monday, November 02. Here is Benzinga's everything-that-matters guide for this Monday's Q3 earnings announcement.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.

Earnings And Revenue

Wall Street analysts see Arista Networks reporting earnings of $2.21 per share on sales of $580.47 million. Arista Networks reported a per-share profit of $2.69 when it published results during the same quarter last year. Sales in that period totaled $654.41 million.

Why Analyst Estimates And Earnings Surprises Are Important

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

The Wall Street consensus estimate for earnings would represent a 17.84% decrease for the company. Revenue would be down 11.3% on a year-over-year basis. Arista Networks's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q2 2020 Q1 2020 Q4 2020 Q3 2019EPS Estimate 1.95 1.81 2.10 2.41EPS Actual 2.11 2.02 2.29 2.69Revenue Estimate 529.73 M 517.86 M 550.98 M 653.25 MRevenue Actual 540.57 M 523.03 M 552.55 M 654.41 M

Stock Performance

Shares of Arista Networks were trading at $203.18 as of October 29. Over the last 52-week period, shares are up 9.16%. Given that these returns are generally positive, long-term shareholders should be satisfied going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Arista Networks is scheduled to hold the call at 16:30:00 ET and can be accessed here.