Aruba Networks, Inc. (ARUN), Ruckus Wireless Inc (RKUS), Ubiquiti Networks Inc (UBNT): No Bargains in Wi-Fi Solutions Providers

After recent weakness in the Wi-Fi solutions providers, do any of the stocks provide bargains now? Both Aruba Networks, Inc. (NASDAQ:ARUN) and Ruckus Wireless Inc (NYSE:RKUS) have been absolutely crushed recently while Ubiquiti Networks Inc (NASDAQ:UBNT) has been the lone winner in the sector. One big question is whether the big boy in wireless network gear, Cisco Systems, Inc. (NASDAQ:CSCO) has returned to reclaim market share in the sector.

Through most of the last 5 – 10 years, the sectors where Cisco Systems competes saw new technology leaders constantly chip away at the market share leader as it focused on a vast array of sectors. This allowed wireless network equipment providers such as Aruba Networks to gain market share.

The sector is vast including providers focused on enterprise networks bombarded by workers bringing wireless devices, or the concept BYOD (bring your own device), to municipalities and event venues looking for quality service required by customers.

Reviewing the stocks

Aruba Networks, Inc. (NASDAQ:ARUN) is now only worth $1.5 billion after losing 50% of its value in the last two months. The provider of network access solutions for the mobile enterprise announced in early May that results for the quarter ending April 30 would be below expectations. The shocking part is that earnings went from guidance of approximately $0.20 to only $0.11.

The main reason for missing estimates was a challenging economic environment pushing out customer orders around the globe. Analysts expect revenue growth in the 16-17% range over the next couple of years with earnings only flat in the year ending in July. With the stock trading at 15 times forward estimates, it doesn’t provide much of a bargain.

Ruckus Wireless Inc (NYSE:RKUS) was a hot IPO at the end of 2012 with the stock doubling in months, yet it now trades below the opening price. The company is a leader in carrier-class Wi-Fi solutions with products that include gateways, access points, and controllers.

Unfortunately for investors, Ruckus Wireless Inc (NYSE:RKUS) is worth nearly $1 billion though the expectations are now that earnings will plunge the next couple of years with only $0.27 slated for 2014. Revenue growth is expected to accelerate next year to nearly 25% growth, yet the margins won’t match those of 2012.

Ubiquiti Networks Inc (NASDAQ:UBNT) is surprisingly now the largest stock in the group with a market cap of nearly $1.7 billion. Possibly the reasoning is that the stock crashed earlier than the group when it dropped from $35 to $7.50 back in the summer of 2012.