What happened

Shares of Palo Alto Networks (NYSE:PANW) rose 16.6% in August of 2018, according to data from S&P Global Market Intelligence. With little real news to lean on during the month, investors simply looked ahead to early September's fourth-quarter report.

So what

The network security expert saw nearly total radio silence from Wall Street players in August, but analyst firm Oppenheimer did publish a bullish report on the 24th. In it, the firm outlined strong channel checks and healthy customer interest in Palo Alto's latest range of firewall appliances. The firm expected a report strong enough to lift Palo Alto's valuation multiples into a higher orbit.

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Image source: Getty Images.

Now what

The actual report delivered on Oppenheimer's hopes, beating Wall Street's consensus estimates across the board with a side of optimistic guidance for the first quarter of fiscal year 2019.

Cybersecurity is a hot industry these days, and Palo Alto Networks is a proven leader in that sector. That being said, the stock trades at nosebleed valuation ratios, and I'm not convinced that the market can stomach much higher price-to-cash flow or price-to-sales multiples -- and we can't even talk about plain old P/E ratios until Palo Alto can start delivering consistently positive earnings.

So what we have here is a classic hypergrowth stock, marrying skyrocketing revenue gains to sky-high valuation multiples. The combination is a little rich for my own blood, but Palo Alto investors can hardly complain about a market-stomping gain of 64% over the last 52 weeks.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.