Aruba Networks (Nasdaq: ARUN) has been on fire in 2011. The stock had gained more than 57% year to date as of last Thursday night.

But that’s where the rocket ride turned into a meltdown. Aruba shares fell more than 15% on Friday after a disappointing third-quarter report and have now gained a much less impressive 31% year-to-date.

Beauty is in the eye of the beholder, though. Aruba's sales jumped by 53% year over year to $106 million, while non-GAAP earnings doubled to $0.16 per share. It's kind of hard to see a letdown in that kind of growth. In fact, Aruba beat Street estimates on both counts.

But that just wasn't good enough. Analysts are worried about stagnant gross margins and a possible end to Aruba's habit of beating estimates and raising guidance. Lower prices as Aruba expands into cost-conscious markets overseas could be a long-term problem.

Those arguments don't hold water as I see it. For one, Aruba's gross margins are hovering around the 65%-70% mark in a long-term view, and while they took a slight bump last quarter, they still look very strong on a historical basis. For another, the complaints about meeting estimates makes me wonder whether those analysts wouldn't be better off simply adjusting their estimates a bit lower. Management is well within its rights to set a conservative bar for the next quarter, as Apple is wont to do on a regular basis. Nobody complains about those easy-to-hit targets.

The only complaint I'd buy about Aruba today is that the stock is far too expensive. Shares are trading for 8 times trailing sales, and the $0.03 of trailing earnings makes P/E ratios completely useless. By comparison, shares of close competitors Motorola Solutions (NYSE: MSI) and Hewlett-Packard (NYSE: HPQ) can be had for less than 1 times sales and 15 times earnings.

Even Cisco (Nasdaq: CSCO), which is widely viewed as Aruba's greatest threat, trades at only 13 times earnings. Unlike broadly focused Cisco, Aruba is exploiting a high-growth segment of the networking market, with its focus on enterprise-class wired and wireless communications, but those valuation ratios are still outlandish. Just compare Aruba with Riverbed Technology (Nasdaq: RVBD), another company exploiting outflanking Cisco in new high-growth networking technologies. It trades at a similar sales multiple but is also solidly profitable and continues taking market share.

So Aruba comes back to earth for a while. The move makes sense, but the reasons behind it don't. To find out whether this company and its stock ever meet a happy medium between lofty expectations and excellent performance, you need to watch it like a hawk. Our new My Watchlist feature helps you do just that, by keeping your finger on the pulse of your favorite tickers. Add Aruba to My Watchlist, and you'll be on your way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.