OSI Systems (NASDAQ:OSIS) just can't seem to catch a break.

Last week, OSI won a $27 million contract to sell Rapiscan cargo and vehicle inspection systems to "an undisclosed international government agency." No sooner had it spread the good news, though, than out came rival (and Motley Fool Rule Breakers recommendation) American Science & Engineering (NASDAQ:ASEI) with its own announcement of a similar-sized sale of ZBV X-ray vans to the U.S. government.

(L-3 Communications (NYSE:LLL)? Analogic (NASDAQ:ALOG)? GE (NYSE:GE)? Do any of you have any news you'd like to share with the class?)

After having its thunder stolen last week, you might have hoped OSI would get a bit of a boost this week when it reported 29% earnings growth in its fiscal year-end quarter, beat Wall Street's revenue estimates, and promised to do so once again next year. You might have hoped that, but ...

No such luck
Turns out, boffo revenue growth doesn't cut it when it's paired with an earnings miss. Double-pair it with earnings guidance below analyst predictions for next year, and your stock's bound to decline even on a "green" day for Wall Street.

Fact of the matter is, I rather suspect OSI got off easy with yesterday's 1% decline. Because the rest of the news was even worse. To keep things in perspective and avoid short-term-focus-ism, let's examine the numbers for OSI's full fiscal year 2008:

  • Things started off well, with revenue increasing 17% to $623 million.
  • This helped OSI swing from a $1.12-per-share loss to a $0.78-per-share profit for the year.

Both of those things sound good, but here's where OSI went wrong. Turns out, the revenue growth of which OSI was so proud may not be sustainable.

Consider: Backlog currently sits at $212 million, up barely 1% from this time last year. Worse, the firm's Security division in particular -- the one that was boasting about the $27 million contract last week -- saw its revenue decline about 1% to $116 million.

Meanwhile, free cash flow for the year ran negative by $12.8 million.

Foolish takeaway
Does any of that sound like good news to you? Yeah, me neither. Like I said, OSI got off easy.

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Fool contributor Rich Smith owns shares of AS&E, which is a Rule Breakers pick. The Motley Fool has a disclosure policy.