Ruckus Wireless (RKUS) is a provider of carrier-class Wi-Fi solutions, called Smart Wi-Fi, which are used by service providers and enterprises in solving network capacity and coverage issues arising from accelerating traffic and users on wireless networks. The company was founded and incorporated in Delaware in 2002, under the name Sceos Technologies, which was later changed to Ruckus Wireless. On November 16, 2012, it completed an initial public offering by issuing 8.4 million shares at $15.00 per share, and began trading on the New York Stock Exchange under the symbol RKUS.
The company’s offerings incorporate proprietary technologies, including Smart Radio, Smart QoS, Smart Mesh, SmartCell, and Smart Scaling. It generates revenue through the sale of its products and services to more than 23,000 customers worldwide. And since going public, Ruckus has enjoyed steady top-line growth, driven by increasing traffic across Wi-Fi networks, aided by the ongoing proliferation of connected devices, such as smartphones and tablets, among consumers.
Nevertheless, inflated expenses have hindered the bottom line of late. The company has been upping investments in its sales and services platforms, which has erased much of Ruckus’ recent top-line momentum. In fact, the company managed to only break even in its most recent quarter. For full-year 2013, earnings actually declined quite sharply, though this was partly due to the absence of income related to the release of the valuation allowance of the company’s deferred tax assets from the prior year.
Ruckus appears well positioned for the long haul. The top line should continue to benefit from healthy demand for the company’s solutions, as capacity and coverage will probably remain key issues for its customer base. In the meantime, margins will likely widen in the years ahead, as costs begin to moderate, leading to healthier earnings comparisons. Also worth noting, the balance sheet appears to be in good shape. Indeed, Ruckus has no debt and an ample cash balance, which speaks to its financial stability.
From an investment perspective, the stock is currently trading far off from its all-time high, and slightly below its IPO price. But, based on the company’s rosy long-term outlook, there may be considerable upside potential here for those with wider investment horizons. We suggest interested subscribers consult our full-page report on RKUS stock in the Value Line Investment Survey for a more in depth view.
At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.