Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, handheld device accessory specialist ZAGG (Nasdaq: ZAGG) has received the dreaded one-star ranking.

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

ZAGG facts

Headquarters (founded) Salt Lake City
Market Cap $383.6 million
Industry Consumer electronics
Trailing-12-Month Revenue $118.1 million

Chairman/CEO Robert Pedersen II

CFO Brandon O'Brien

Return on Equity (average, past 3 years) 37.2%
Cash/Debt $13.5 million / $66 million
Competitors Apple (Nasdaq: AAPL)

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

On CAPS, 38% of the 336 members who have rated ZAGG believe the stock will underperform the S&P 500 going forward. These bears include All-Stars PaulNy and TSIF, both of whom are ranked in the top 5% of our community.

This past summer, PaulNy touched on ZAGG's seemingly unsustainable valuation:

As a longtime user of the Invisible Shield, I was disappointed with my last one for an iPhone (lasted 3 months). Went with a rival product which seems much better. Not sure that Zagg's popularity will grow.

In fact, ZAGG currently sports a rather lofty P/E of 25. That represents a clear premium to Apple (14.3), whose SmartCover now competes directly with ZAGG, as well as Hewlett-Packard (NYSE: HPQ) (6.0) and Research In Motion (Nasdaq: RIMM) (3.5).

CAPS All-Star TSIF elaborates on the bear case:

I'm back again on the theory that ZAGG well overshot its mark on this rally, mostly due to short covering. I've pitched extensively about how over valued ZAGG is and my concern that their return policy and accounting model is suspect at best and will catch up with them. Also, you can't inventory a thousand [SKUs] that go dead as fast as you generate new ones. Those fond of ZAGG have some of the strongest conviction bias I have ever seen. Good luck to them. This economy is still in flux and ZAGG will show it's true value in 6-9 months.

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