It’s easy to understand why sales growth is critical for a company, as it’s the foundation of generating profits. Strong top line performance allows companies to achieve scaling efficiencies, generate continuous shareholder value, and many other obvious benefits.
And when it comes to sales growth, three companies – Uber Technologies (UBER) , Arista Networks (ANET) , and Palo Alto Networks (PANW) – have been standouts.
All three have enjoyed significant revenue growth over the last several years and have seen recent positive earnings estimate revisions, with the latter reflecting optimism among analysts.
For those seeking top line compounders, let’s take a closer look at how each currently stacks up.
Uber Technologies
Uber’s earnings outlook shifted highly positive following its latest better-than-expected quarterly print, with the stock sporting the highly-coveted Zacks Rank #1 (Strong Buy). The revisions trend has been particularly bullish for its current year.
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The company sports an impressive growth profile, with earnings forecasted to climb 110% on 20% higher revenues in its current year. And in FY24, expectations allude to a further 161% climb in earnings paired with an 18% sales bump.
Uber’s revenue growth has been rapid, with FY22 sales of $31.9 billion up more than 80% year-over-year.
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And to top it off, Uber has been a consistent earnings performer, exceeding the Zacks Consensus EPS Estimate by an average of 470% across its last four releases.
Arista Networks
Arista Networks shares have enjoyed bullish activity year-to-date amid the artificial intelligence frenzy, up more than 50% and widely outperforming the general market. The company has enjoyed positive earnings estimate revisions across the board, landing it into a favorable Zacks Rank #2 (Buy).
Impressively, FY22 sales of $4.4 billion grew nearly 50% year-over-year, a continuation of top line growth already well in place. Revenue growth is slated to continue, with estimates calling for 30% higher sales in its current year (FY23) and an additional 10% in FY24.
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Perhaps to the surprise of some, ANET shares have widely outperformed over the last decade, up 1250%. In fact, ANET shares have annualized a 32% return over the period, well above that of the S&P 500.
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Palo Alto Networks
Palo Alto Networks shares have also enjoyed favorable tailwinds from the AI frenzy, up nearly 70% on a year-to-date basis. The company has seen its earnings outlook shift favorably across the board, with the $5.30 Zacks Consensus EPS Estimate for its current year up 40% since August of last year.
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PANW shares got a nice lift following its latest quarterly release, with the company exceeding the Zacks Consensus EPS Estimate by 12% but modestly falling short of revenue expectations. Earnings improved 80% year-over-year, whereas revenue climbed 26% from the same period last year.
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Growth looks to continue, with Zacks Consensus Estimates alluding to 20% higher earnings paired with a 19% sales bump in its current year (FY24). Peeking ahead to FY25, earnings and revenue are currently expected to improve by 19% and 18%, respectively.
Bottom Line
Strong top line performance provides many obvious benefits, including scaling efficiencies and meaningful earnings growth.
And when it comes to compounding revenue, all three companies above – Uber Technologies (UBER), Arista Networks (ANET), and Palo Alto Networks (PANW) – are great examples.
In addition to strong revenue growth, all three have enjoyed favorable earnings estimate revisions.
— Derek Lewis
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