Sadly, there's no accounting for taste. Still, there must be some reason why investors gobbled up shares of Motley Fool Stock Advisor pick VASCO Data Security (NYSE:VDSI) after last week's earnings. Let's take a closer look at the numbers, shall we?

Thing is, VASCO's numbers weren't all that pretty. About the best thing you can say is that the news wasn't as bad as some feared, judging from the "estimates" VASCO beat:

  • Revenues in Q2 2008 rose a respectable, but hardly bull-worthy 9%.
  • Per-share profits barely eked out a win over that rate, up 10% to $0.20.
  • Operating profits actually dropped 4%.

Ugh, again
I know. Hardly the kind of news you'd expect to spark an almost 20% run-up in stock price. And yet, that's just what VASCO has enjoyed since reporting its news on Thursday. So was there any good news?

Yes and no
Starting with "yes," gross margins jumped 800 basis points to 72% in the second quarter. VASCO continued adding hundreds of new customers, including Banco Itau (NYSE:ITU) in Brazil, to a slate that already includes the likes of Citibank (NYSE:C), Wachovia (NYSE:WB), and HSBC (NYSE:HBC).

Moving to "no," management walked back its guidance for this year by a full 10 percentage points, and now expects revenues to rise just 15% to 25%. Gross margins earned on those revenues this year will fall short of Q2's remarkable level, coming in between 60% and 68%.

And back to "yes" again, VASCO expects to end the year with operating margins of 20% to 25% -- about what it's made over the past 12 months, and far ahead of the margins posted by rivals like EMC (NYSE:EMC) and ActivIdentity (NASDAQ:ACTI). Now, a big part of the reason operating profits dropped during the quarter was "investments in ... infrastructure and continuing ... aggressive hiring" to capitalize on the beefy gross margins. Given all the spending, the likelihood that operating margins won't take a bigger hit in the big-picture, full-year review has to be encouraging.

Foolish takeaway
In the final analysis, I remain decidedly un-wowed by the quarter's news, despite being a VASCO shareholder myself.

But not everyone agrees. Are you still feeling secure about VASCO after reading all that? Find out why one Fool believes that you need VASCO.

Check out the records of the two shops that upgraded VASCO here and here.

And learn whether the crew at Motley Fool Stock Advisor still likes the stock -- once you sign up for a free trial.

Fool contributor Rich Smith owns shares of VASCO Data Security. The Motley Fool has a disclosure policy.