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Arista Networks, Inc. (ANET) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Arista Networks, Inc. (ANET)

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Intrinsic Value (DCF)

Current$130.59
→
Intrinsic$112.03
-14%
$75.64$112.03$184.32
Market implies 29% growth for 5 years
ANET appears fairly valued — current price aligns with our DCF estimate.
At $131, the market prices in continued strong cash flow growth (29%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $76 → Bull $184. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$142$153$165$178
10%$97$104$112$120
12%$73$78$84$90
14%$58$63$67$72

Bull Case

  • Bull case ($184) offers 41% upside at 30% growth, 8% discount

Bear Case

  • Bear case ($76) implies 42% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$4.60B
Year 2$5.74B
Year 3$7.18B
Year 4$8.98B
Year 5$11.22B
Terminal$177.78B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.68BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ANET stock undervalued or overvalued?
🔴 OVERVALUED

ANET trades at $130.59 vs. our DCF-derived intrinsic value of $76.92, implying -42% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($113.06) suggests limited upside.

What is ANET's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.68B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-2.76B net debt and dividing by 1.28B shares: Bear $52.26 | Base $76.92 | Bull $113.06. Current price $130.59 implies -42% to base case.

How is ANET's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($95.77B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.