Why Ruckus Wireless Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Wi-Fi solutions provider Ruckus Wireless (NYSE: RKUS  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Ruckus and see what CAPS investors are saying about the stock right now.

Ruckus facts

Headquarters (founded)

Sunnyvale, Calif. (2002)

Market Cap

$1.7 billion

Industry

Communications equipment

Trailing-12-Month Revenue

$193.5 million

Management

CEO Selina Yo

Co-Founder/Chief Technology Officer William Kish

Trailing-12-Month Operating Margin

9.8%

Cash/Debt

$37.3 million / $0

Competitors

Aruba Networks (NASDAQ: ARUN  )

Cisco Systems (NASDAQ: CSCO  )

Ericsson (NASDAQ: ERIC  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 28% of the 572 members who have rated Ruckus believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star TMFBlacknGold, wrote that the Ruckus bear case all boiled down to price:

I'm uncomfortable with the premium investors must pay to tap into this company's growth. Yes, it is growing. Yes, it is newly profitable. However, EPS drops precipitously if you discount the outlier second quarter. Without the monstrous 2Q12 Ruckus would have an EPS of around $0.10 -- almost 1/3 of the current figure.

That being said, the company does have an awesome website and a growing niche. I just wouldn't buy into it near its current $1.7 billion market cap.

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