It's been a tough year for investors -- particularly investors with heavy allocations in growth stocks. Meta Platforms (META -2.70%) is just one of many growth stocks that have been absolutely hammered in 2022. Year to date, the stock is down more than 51% at the time of this writing. But investors should note that there's something much different about this growth stock than many of the others. The company is extremely profitable, has tons of cash on its balance sheet, and is spending billions of dollars on buying back its own shares. Even more, Meta's valuation is so cheap now that the stock has transitioned into value territory.

Is it time to buy the beaten-down Facebook parent's stock?

Shares are down for a good reason

Before we take a closer look at Meta stock's valuation and try to determine whether or not shares are a buy, investors should realize that it's not just the stock that has disappointed. The underlying business has, too. Over the last year, the company's year-over-year revenue growth rate slowed and eventually turned negative. Second-quarter revenue declined 1% year over year. Even worse, management guided for third-quarter revenue to decline between 2% and 10% year over year.

It's no wonder Meta shares have been slammed. This slow growth is in stark contrast to the company's strong growth rates last year. Meta's revenue in the third quarter of 2021, for instance, soared 35% year over year. Then there are the mounting concerns about Meta's massive losses in its nascent reality labs segment -- a business consisting of Meta's augmented and virtual reality consumer hardware, software, and content. The segment generated $452 million in second-quarter revenue but contributed a loss from operations of $2.8 billion.

These are some discouraging narratives.

A person hitting a buy button on a keyboard.

Image source: Getty Images.

Meta is still a cash cow

But here's where investors may want to consider giving Meta stock more credit. The tech company is a cash cow despite its cash-burning reality labs segment. Meta's trailing-12-month free cash flow, or the cash left over after both regular operations and capital expenditures are accounted for, was $35.8 billion. 

What about the company's cash balance? It has a war chest of more than $40 billion of cash, cash equivalents, and marketable securities. 

There are material benefits of being a cash cow like this. Namely, Meta can use the cash to buy back its shares when it believes they become undervalued. The company is doing exactly this, snapping up about $5 billion of its shares during Q2. Looking ahead, Meta had more than $24 billion left in its buyback authorization, or 5% of its current market cap.

With the stock trading at just 14 times earnings and just 12 times its free cash flow, the market seems to have priced in many of Meta's troubles. This is particularly true if investors take management at their word about some of the company's challenges only being near-term problems.

"There's no doubt that we're going through a transition period and doing so at a time of global economic uncertainty," said Meta chief operating officer Sheryl Sandberg in the company's second-quarter earnings call. "But despite the current challenges, I'm very confident for the long term. We're facing a cyclical downturn but over the long run, the digital ad market will continue to grow."

While there's no guarantee Sheryl is right, the stock may have become cheap enough to make a small investment in the stock worth the risk. Indeed, if Meta does return to meaningful growth, the stock will likely look extremely cheap in hindsight.