Arista Networks vs Cisco Systems Which Performs Better?

Arista Networks and Cisco Systems are two prominent players in the networking and communication equipment industry, both offering a wide range of products and services to businesses and consumers globally. While Cisco Systems, with its long-standing reputation and market dominance, remains a popular choice for many customers, Arista Networks has emerged as a strong competitor with its innovative solutions and competitive pricing. In this analysis, we will delve into the financial performance and market outlook of both companies to provide insights into their stocks' potential for investors.

Arista Networks or Cisco Systems?

When comparing Arista Networks and Cisco Systems, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Arista Networks and Cisco Systems.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Arista Networks has a dividend yield of -%, while Cisco Systems has a dividend yield of 2.71%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Arista Networks reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Cisco Systems reports a 5-year dividend growth of 3.90% year and a payout ratio of 68.09%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Arista Networks P/E ratio at 53.05 and Cisco Systems's P/E ratio at 24.90. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Arista Networks P/B ratio is 15.29 while Cisco Systems's P/B ratio is 5.17.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Arista Networks has seen a 5-year revenue growth of 1.85%, while Cisco Systems's is 0.37%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Arista Networks's ROE at 32.54% and Cisco Systems's ROE at 20.56%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $109.88 for Arista Networks and $58.38 for Cisco Systems. Over the past year, Arista Networks's prices ranged from $56.65 to $112.77, with a yearly change of 99.06%. Cisco Systems's prices fluctuated between $44.50 and $60.23, with a yearly change of 35.35%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.