Analyzing Arista Networks (NYSE:ANET) and Harmonic (NASDAQ:HLIT)

Harmonic (NASDAQ:HLIT) and Arista Networks (NYSE:ANET) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.

Risk & Volatility

Harmonic has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Arista Networks has a beta of 1.62, meaning that its stock price is 62% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Harmonic	-8.50%	10.91%	5.98%
Arista Networks	38.37%	30.65%	19.44%

Valuation & Earnings

This table compares Harmonic and Arista Networks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harmonic	$443.88 million	2.86	-$43.31 million	($0.42)	-27.67
Arista Networks	$9.01 billion	27.00	$3.51 billion	$3.17	60.83

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

Analyst Recommendations

This is a summary of current ratings and price targets for Harmonic and Arista Networks, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harmonic	1	3	3	0	2.29
Arista Networks	0	1	20	2	3.04

Harmonic currently has a consensus price target of $17.50, suggesting a potential upside of 50.60%. Arista Networks has a consensus price target of $227.80, suggesting a potential upside of 18.14%. Given Harmonic’s higher probable upside, equities analysts plainly believe Harmonic is more favorable than Arista Networks.

Insider & Institutional Ownership

99.4% of Harmonic shares are owned by institutional investors. Comparatively, 82.5% of Arista Networks shares are owned by institutional investors. 1.7% of Harmonic shares are owned by company insiders. Comparatively, 2.7% of Arista Networks shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Arista Networks beats Harmonic on 13 of the 15 factors compared between the two stocks.

About Harmonic

Harmonic Inc., together with its subsidiaries, provides broadband solutions worldwide. The company operates through Broadband and Video segments. The Broadband segment sells broadband access solutions and related services, including cOS software-based broadband access solutions to broadband operators; and cOS central cloud services, a subscription service for cOS customers. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telco Pay-TV service providers, as well as to broadcast and media, including streaming media companies. Its video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides VOS360 SaaS platform that provides both streaming and channel origination and distribution services; and software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, VOD, catch-up TV, start-over TV, network-DVR and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, integration services, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training, as well as SaaS-related support and deployment. It sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was incorporated in 1988 and is headquartered in San Jose, California.

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.