Critical Analysis: Arista Networks (NYSE:ANET) & F5 (NASDAQ:FFIV)

Arista Networks (NYSE:ANET) and F5 (NASDAQ:FFIV) are both large-cap technology companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Insider & Institutional Ownership

82.5% of Arista Networks shares are owned by institutional investors. Comparatively, 90.7% of F5 shares are owned by institutional investors. 2.7% of Arista Networks shares are owned by company insiders. Comparatively, 0.5% of F5 shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Arista Networks and F5″s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arista Networks	$9.01 billion	23.91	$3.51 billion	$3.72	45.89
F5	$3.42 billion	5.15	$722.15 million	$12.53	24.81

Arista Networks has higher revenue and earnings than F5. F5 is trading at a lower price-to-earnings ratio than Arista Networks, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Arista Networks has a beta of 1.61, meaning that its stock price is 61% more volatile than the S&P 500. Comparatively, F5 has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Arista Networks and F5, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arista Networks	0	2	20	3	3.04
F5	1	7	4	0	2.25

Arista Networks currently has a consensus price target of $240.24, indicating a potential upside of 40.74%. F5 has a consensus price target of $443.00, indicating a potential upside of 42.52%. Given F5’s higher possible upside, analysts clearly believe F5 is more favorable than Arista Networks.

Profitability

This table compares Arista Networks and F5’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arista Networks	38.37%	30.65%	19.44%
F5	21.14%	21.00%	11.85%

Summary

Arista Networks beats F5 on 12 of the 15 factors compared between the two stocks.

About Arista Networks

Arista Networks, Inc. engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for data center, campus, and routing environments in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Its cloud networking solutions consist of Extensible Operating System (EOS), a publish-subscribe state-sharing networking operating system offered in combination with a set of network applications. The company offers data center and cloud networking systems, including newer artificial intelligence (AI) ethernet switching platforms; campus wired and wireless products, and routing systems addressing Core Routing, Edge Routing, Data Center Interconnect (DCI), Multi-cloud and Wide Area Networking (WAN) use cases; and a suite of value-add software solutions that leverage EOS to provide end-to-end orchestration, automation, analytics, network monitoring, and security. It also provides post contract customer support services, such as technical support, hardware repair and replacement parts beyond standard warranty, bug fixes, patches, and upgrade services. The company serves a range of industries comprising internet companies, service providers, financial services organizations, government agencies, media and entertainment companies, telecommunication service providers, and others. It markets and sells its products through distributors, system integrators, value-added resellers, and original equipment manufacturer partners, as well as through its direct sales force. The company was formerly known as Arastra, Inc. and changed its name to Arista Networks, Inc. in October 2008. Arista Networks, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.

About F5

F5, Inc. provides multi-cloud application security and delivery solutions in the United States, Europe, the Middle East, Africa, and the Asia Pacific region. The company’s distributed cloud services enable its customers to deploy, secure, and operate applications in any architecture, from on-premises to the public cloud. It offers unified, security, networking, and application management solutions, such as web app and API protection; multi-cloud networking; application delivery and deployment; domain name system; content delivery network; and application deployment and orchestration. The company also provides application security and delivery products, including NGINX Plus; NGINX Management Suite; NGINX Ingress Controller; NGINX App Protect; BIG-IP Packaged Software; and BIG-IP Systems. In addition, it provides a range of professional services, including maintenance, consulting, training, and other technical support services. F5, Inc. sells its products to large enterprise businesses, public sector institutions, governments, and service providers through distributors, value-added resellers, managed service providers, systems integrators, and other indirect channel partners. It has partnerships with public cloud providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform. The company was formerly known as F5 Networks, Inc. and changed its name to F5, Inc. in November 2021. F5, Inc. was incorporated in 1996 and is headquartered in Seattle, Washington.