We Fools tend to chide Wall Street for its short-term thinking. Accordingly, I think it's more than fair to congratulate analysts when they take a longer view.

Take Procter & Gamble (NYSE:PG), for example. On Wednesday, the consumer products giant reported a 37% increase in net income for the third quarter. But that wasn't enough to please investors. Sales, though up more than 20% year over year, came in $350 million short of Street estimates. And full-year guidance, while it increased by $0.02 per stub, merely equaled what analysts were already expecting. The ensuing sell-off sent the shares down by more than 3%, and they've yet to recover.

Surprisingly, several analysts expressed disbelief at the reaction. MarketWatch polled several of them in its earnings-day coverage of the stock. I think A.G. Edwards (NYSE:AGE) analyst Jason Gere said it best in a research note, "There are a lot of things going right at PG. We are not going to say that the entire pullback in PG's stock (on Wednesday) is unwarranted, because it isn't. But we are certain that investors are confused between ultraconservatism in estimates and slowing growth."

And I happen to agree with them this time. P&G, after all, is a very healthy business. For example, management says sales gains were fueled by a 5% increase in organic volume, which equals products shipped, exclusive of the effects of acquisitions and divestitures. In addition, organic sales growth was up 6%, which exceeded management's long-term target of 3-5%.

Margins, too, were higher across the board. Take operating margin, which was up roughly 160 basis points and benefited from cost savings, pricing power, and higher volume. That gain also had a healthy impact on cash flow from operations, which rose more than 24% to $8.2 billion for the first nine months of fiscal 2006.

With the pullback, P&G now trades for 18.5 times next year's estimates. A quick check of Value Line shows the stock hasn't been that cheap on a P/E basis since 1995. And its current 2.20% dividend yield is 16% higher than its five-year average. That's enough for any investor to consider putting this stock on their watchlists. In other words, when it comes to its reaction on the P&G selloff, I'd have to say that Wall Street might actually be acting ... Foolishly. That may be a first, in which case I have to say: Great job on this one, guys.

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Fool contributor Tim Beyers figures he ought to own P&G for all the Pampers he's bought over the years. Unfortunately, Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Fool profile . The Motley Fool has an ironclad disclosure policy .