When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. One great example is Arista Networks, Inc. (NYSE:ANET) which saw its share price drive 280% higher over five years. It's even up 7.6% in the last week.

Since the stock has added US$6.0b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Arista Networks

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over half a decade, Arista Networks managed to grow its earnings per share at 43% a year. This EPS growth is higher than the 31% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how Arista Networks has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Arista Networks stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Arista Networks has rewarded shareholders with a total shareholder return of 65% in the last twelve months. That gain is better than the annual TSR over five years, which is 31%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Is Arista Networks cheap compared to other companies? These 3 valuation measures might help you decide.

But note: Arista Networks may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.