Motley Fool Stock Advisor recommendation and entertainment giant Time Warner (NYSE:TWX) reported solid fourth-quarter results Tuesday. Revenue climbed 7% over the comparable year-ago quarter, while operating income rose 37%.

Double-digit increases to adjusted operating income came from the networks, filmed entertainment, and cable and publishing divisions -- that's everyone except AOL, and even AOL managed an increase of 4.9%. So, overall, business was looking good.

To discuss Time Warner, it helps to look at a five-year chart. Since early 2002, the stock has not traded above $20 a share, and it was hovering at $18.08 (up 4%) in late-afternoon trading Tuesday. That year, the bottom line showed a $98.7 billion loss. A lot has changed since then. For 2005, the company reports it had free cash flow of $4.4 billion (that's $0.94 a share).

Since that tumultuous 2002, the company has increased adjusted operating income before depreciation and amortization (adjusted income) every year, and 2005 has been the best year since. Time Warner also provided its 2006 outlook, calling for a "high single digits" increase in adjusted income and a 35% to 45% conversion of that income into free cash flow.

So what is there not to like? Well, if you're investor activist Carl Icahn, there's plenty. He sees Time Warner as a $27 stock (that's 49.3% more than where it is trading this minute). He'd like to see the company carved up so its value is more obvious -- like Sumner Redstone did at Viacom -- creating a new, faster-growing Viacom (NYSE:VIA) and a slower-growing CBS (NYSE:CBS).

But listen to Tuesday's conference call, and you get every indication that the company plans to do things its way. Yes, Time Warner has implemented one Icahn idea. Under a $12.5 billion buyback program, scheduled to run through August 2007, $3 billion in stock has been purchased. There's only one problem. To be kind, all that buying isn't moving the stock.

The problem at Time Warner is this: The stock is selling for 20.4 times 2006 estimated earnings, and analysts expect the company to compound earnings by 11% a year for the next five years. There are fantastic brands within Time Warner, and this supersize company is producing big free cash flow numbers. But at the current earnings multiple, I just can't see the growth rate supporting a significantly higher price.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.