Reviewing Emulex (ELX) and Arista Networks (ANET)

Emulex (NYSE: ELX) and Arista Networks (NYSE:ANET) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Emulex and Arista Networks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emulex 0 0 0 0 N/A
Arista Networks 0 13 18 0 2.58

Arista Networks has a consensus target price of $168.89, indicating a potential downside of 11.67%. Given Arista Networks’ higher probable upside, analysts plainly believe Arista Networks is more favorable than Emulex.

Earnings and Valuation

This table compares Emulex and Arista Networks’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Emulex N/A N/A N/A N/A N/A
Arista Networks $1.36 billion 10.20 $350.69 million $3.85 49.67

Arista Networks has higher revenue and earnings than Emulex.

Profitability

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

Net Margins Return on Equity Return on Assets
Emulex -61.34% -54.64% -34.34%
Arista Networks 21.74% 22.64% 14.49%

Insider and Institutional Ownership

59.3% of Arista Networks shares are owned by institutional investors. 28.1% of Arista Networks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Arista Networks beats Emulex on 8 of the 8 factors compared between the two stocks.

About Emulex

Emulex Corporation (Emulex) is a provider of network connectivity, monitoring and management products. It provides solutions for networks that support enterprise, cloud, government and telecommunications sectors. The Company’s portfolio of input/output (I/O) connectivity offerings, including the line of Ethernet and Fiber Channel-based connectivity products, has been designed into server and storage solutions. Its monitoring and management solutions include its network visibility and recording products. The Company’s network connectivity, monitoring and management solutions are offered through two business segments: Connectivity Segment and the Visibility Segment. The Connectivity Segment comprises the Company’s Emulex products, and network connectivity products (NCP) and storage connectivity and other products (SCOP). Its Visibility Segment comprises its Network Visibility Products (NVP).

About Arista Networks

Arista Networks, Inc. is a supplier of cloud networking solutions that use software innovations to address the needs of Internet companies, cloud service providers and data centers for enterprise support. It develops, markets and sells cloud networking solutions, which consist of its Gigabit Ethernet switches and related software. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), a set of network applications and its Ethernet switching and routing platforms. The programmability of EOS has allowed it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has also allowed it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. EOS supports cloud and virtualization solutions, including VMware NSX, Microsoft System Center and other cloud management frameworks.

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