Cisco Systems vs Arista Networks Which Offers More Value?

Cisco Systems and Arista Networks are two prominent companies in the networking industry, competing for market share and investor interest. Cisco, a well-established industry giant, offers a wide range of networking products and services, while Arista, a newer player, specializes in high-performance cloud networking solutions. Both companies have seen fluctuations in their stock prices in recent years, with investors closely monitoring their financial performance, competitive positioning, and technological advancements to make informed investment decisions.

Cisco Systems or Arista Networks?

When comparing Cisco Systems and Arista Networks, 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 Cisco Systems and Arista Networks.

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. Cisco Systems has a dividend yield of 2.71%, while Arista Networks has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Cisco Systems reports a 5-year dividend growth of 3.90% year and a payout ratio of 68.09%. On the other hand, Arista Networks reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

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 Cisco Systems P/E ratio at 24.90 and Arista Networks's P/E ratio at 53.05. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Cisco Systems P/B ratio is 5.17 while Arista Networks's P/B ratio is 15.29.

Growth Investors:

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

Retail Investors:

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