Image source: Sierra Wireless.

What: Shares of Sierra Wireless (NASDAQ:SWIR) rose 22.6% in May, according to data from S&P Global Market Intelligence. Shares surged more than 20% on May 6, following the release of solid first-quarter results. That gain never faded.

So what: The maker of cellular and embedded wireless radio modules beat Wall Street's first-quarter expectations on both the top and bottom lines, breaking a streak of top-to-bottom misses in each of the previous two reports. Management also set full-year guidance targets well ahead of Street projections.

Sierra's cloud and connectivity sales, which include much of its Internet of Things portfolio, nearly doubled in the first quarter. This division accounts for less than 5% of Sierra's total revenues, but is growing much faster than the enterprise and OEM segments.

Now what: The IoT-focused cloud and connectivity division is where it's at for Sierra investors with a long-term focus. The low-margin OEM segment will eventually fade into the background, unless Sierra follows the lead of many sector rivals and sells off its legacy operations with thin profit margins.

That would have to wait a while, however, since OEM operations provide the bulk of Sierra's sales at the moment. This stable but unexciting business helps the company keep the lights on and its innovation engines humming.

In the long run, Sierra wants to be the company that connects a proliferation of IoT devices to their networked motherships. The good old smartphone market is no longer exciting enough to keep the growth fires burning. The company is under heavy investor pressure to deliver extreme growth figures, trading at nosebleed levels of nearly 80 times trailing earnings today. That includes share prices falling 35% over the last 62 weeks because of those two consecutive earnings misses.

Fellow Fool Tim Brugger argues that Sierra Wireless looks like a buy at these levels. It's a simple way to tap into the exploding IoT market.

Tim is not wrong, but the company must deliver on its promises in a whole new way. The stock deserved a spanking for missing expectations in recent quarters, and I'll keep a close eye on how Sierra performs in future quarters. Consistency is a big deal, particularly when analysts can build their estimates on firm management guidance targets. And that's exactly what Sierra's analysts are working with, so the heat is on.

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.