NEW YORK (TheStreet) -- Wall Street has a funny way of being "conveniently cautious" in the way it evaluates growth stories. While some companies can seemingly do no wrong, even amid poor profits, as long as revenue remains impressive, others find themselves in the proverbial "doghouse" with one false move. And this seems to be the case with enterprise security company Palo Alto Networks (PANW) - Get Report, whose stock has been down by as much as 30% since a brutal May quarter.

Although the shares have rebounded slightly, up 14% over the past three months, Palo Alto has lost 35% of its value over the trailing 12 months. On Monday, however, following a better-than-expected fourth-quarter performance, during which revenue soared 49% year-over-year, investors received a glimpse of the promise that once elevated Palo Alto to "darling" status. But does it mean everything is back to "normal?"

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I'm not saying that 49% growth is not impressive.

I've followed this company

long enough to know that growth has never been the problem. You see, when compared to larger rivals like


(CSCO) - Get Report



(FTNT) - Get Report

, Palo Alto does more than hold its own in terms of technology. In fact, I believe the company has pioneered -- what I believe to be -- next-generation security. Nonetheless, the company's ability to grow profits remains a concern.

So although the stock is up slightly following Monday's fourth-quarter report, I can't say that earnings-per-share of 6 cents (excluding costs), which was in-line with estimates, is all that impressive. Plus, let's not forget that Palo Alto management had issued brutal guidance in the May quarter, which sent the stock

tumbling down 15%

, fueling merger and acquisition discussions.

Essentially, even with the downbeat guidance issued in May, that the company only managed to meet lowered expectations should be reason for some anxiety, if not outright concern. I don't want to overstate what this means, especially since Palo Alto is still a relatively young company. But on the heels of a profit miss in the May quarter, a meaningful sequential improvement would have gone a long way to keep the bears at bay.

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Another issue is Cisco, which recently picked off anti-hacking giant


( FIRE) in a

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$2.7 billion deal

. To be brief, it was an expensive transaction that values Sourcefire at 12 times revenue. Not strapped for cash, Cisco could afford some luxuries. But this deal wasn't just about extravagance. Cisco is

going after Palo Alto's market position

. For that matter, I don't believe either Fortinet or

Check Point

(CHKP) - Get Report

are safe.

The good news is, unlike the guidance issued in the May quarter, Palo Alto management seems a bit more optimistic about fiscal first-quarter results. The company expects revenue to be in the range of $118 million to $122 million, which is slightly above Street estimates by $1 million. As I've said previously, revenue growth is one of the things that Palo Alto already does well.

Meanwhile, earnings-per-share is expected to come in at 7 cents, in line with estimates. In my opinion, Palo Alto needs a 2-cent beat for the company to erase long-term operational concerns. And given that a Cisco/Sourcefire union might begin to add pressure on Palo Alto's margins, a profit beat (of any kind) will come at a significant cost. It would mean that Palo Alto would have to under-invest in growth areas or find new ways to better manage growth.

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In the meantime, I still wouldn't rule out an acquisition, though. I believe even with Cisco's acquisition of Sourcefire, Cisco is still likely the best suitor. Until that day comes, however, I believe Palo Alto should continue to put up gaudy growth numbers for several more quarters. But absent meaningful signs of leverage, this stock will remain a risky bet.

At the time of publication, the author held no position in any of the stocks mentioned


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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of

where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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