In our house, there are no fewer than four cameras produced by Canon (NYSE:CAJ). Two are old-school professional film SLRs, but the ones that get the most use these days are a couple of snappy little ELPH digital models. Many of my relatives carry the same gadgets, and apparently, we're not the only ones buying these by the bushel.

Yesterday's second-quarter earnings announcement showed a 90% increase in unit sales of digital cameras for Canon, producing 34% revenue growth for the segment over the same period last year. There may be competition from the likes of Nikon, Eastman Kodak (NYSE:EK), Sony (NYSE:SNE), and even Gateway (NYSE:GTW), but Canon's solid technology and friendly ergonomics have carved out a pretty loyal following in the digital camera market.

Too bad cameras are only a lucrative sideline for Canon. The firm's real sales are generated in its business machines segment. Of Canon's $7.5 billion in sales for the quarter, $5.3 billion came from business operations, where margins are higher, to boot. Unfortunately, competition for the low-end printer market is cutthroat, and price battles with firms like Lexmark International (NYSE:LXK) and Hewlett-Packard (NYSE:HPQ) helped pinch Canon's gross margins by about a percent from last year.

Price wars notwithstanding, Canon inked earnings of $0.90 per share for the quarter, a 17% increase, and the firm raised its full-year outlook. Free cash flow for the quarter was $521 million, and the balance sheets are more than healthy, with $6.4 billion in cash and only $356 million in debt. Those are impressive numbers, but at 18 times earnings and an enterprise value-to-free cash flow ratio near 17, the stock looks fairly valued for a big, slowish grower operating in such a hostile environment.

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Photojournalist and Fool contributor Seth Jayson prays every night that the price of the Canon 10Ds will come down. He has no stake in any firm mentioned above. View his Fool profile here.