Gaming equipment company Shuffle Master (NASDAQ:SHFL) had a big week, announcing two acquisitions and reporting fiscal first-quarter earnings. During the quarter, it completed the divestment of its slot-machine assets, and increased revenues and operating income 30% from a year earlier.

This S&P SmallCap 600 member is doing everything right. Last month, in an effort to re-focus on its core business (card shufflers and everything table-game related), the firm sold off all of its slots-related assets to International Game Technology (NYSE:IGT) for $1.6 million after tax, or $0.09 per diluted share.

The company didn't waste any time putting the proceeds from that sale to work. The acquisition announcements were part of a "back to roots" strategy.

The first acquisition is BET Technology, which was a privately held table game company. With BET come the rights to three games and 1,100 tables in operation throughout the country -- games casinos nationwide pay royalties to use.

The second acquisition is Casinos Austria Research and Development (CARD), a wholly owned subsidiary of Casinos Austria AG. CARD manufactures and supplies casinos with new, innovative products, such as shufflers and chip counters.

Shuffle Master didn't release terms of the deals, but did say they would be immediately accretive and are expected to add $10 million in revenue and 10% to 15% to net income in fiscal 2005. The company didn't want to speculate on the benefit in the current fiscal year, since it will have to integrate BET and complete the deal for CARD.

Shuffle Master looks like a great deal by nearly every measure. Earnings are growing 20% a year; the stock has appreciated steadily for five years running; it sports incredible margins; and its debt is just $400,000 with $10 million in cash.

With a P/E of 39 and a PEG ratio of 1.4, the company's earnings multiple currently outpaces its growth rate. Most people would, therefore, say Shuffle Master qualifies as "overpriced." Maybe. But just because a stock is overpriced doesn't mean it has to go down to reach fair valuation. "Overpriced" is a relative term.

In Shuffle Master's case, it's sitting at a common level for small-cap growth stocks. Shave a little off the price appreciation, and at 20% to 30% earnings growth, you've still got a nice return and a fair valuation. Though after the run-up it has experienced this week, you might want to wait for the stock to come down some before taking the plunge.

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Motley Fool contributor Mark Mahorney doesn't own shares of any of the companies mentioned.