Spanking does not get any more public than this. The most active stock (very public) is drug wholesaler Cardinal Health (NYSE:CAH). Having lost a quarter of its value, it's the most down stock today on the New York Stock Exchange (which is public and embarrassing).

The company's press release from yesterday also brought a dressing-down of its competitors. McKesson (NYSE:MCK) and AmerisourceBergen (NYSE:ABC) are among the top 10 percentage decliners.

Cardinal's bad news came in two categories. First, earnings per share for fiscal 2004 are expected to increase about 11%, which is below prior guidance of "mid-teens or better growth." OK, earnings growth has slowed. That might indicate an industry problem.

Next, besides the company receiving a Securities and Exchange Commission subpoena for "revenue classification" documents, it has learned (love that word) that the U.S. Attorney's Office for the Southern District of New York is looking into the same matter. That's bad news.

For those looking for the pearl in all this, it's here: "Operating cash flow for the fourth quarter was substantially above expectations and for the full year is now expected to exceed $2 billion, well ahead of the company's $1.3 billion prior guidance." Given the choice, shareholders prefer upside cash flow surprises to any other news.

What a mix to digest. Earnings will be up 11%. Oh, the shame! Operating cash flow will exceed expectations by well over $700 million. Oh, such pain. And, the Feds are in hot pursuit. Now that hurts.

Investors have a lot to consider. Cardinal trades at a below-market 15 times earnings (based on the company's guidance). One reason is the industry's low operating margins, which run from less than 1% at McKesson to 3.5% at Cardinal. But, with Cardinal's sales of $63 billion, those margins still yield billions in profit dollars.

Public spanking aside, a great bargain is in the making. The company affirmed its long-term goal to "increase earnings per share at a mid-teens or better rate. However, for fiscal year 2005, growth is expected to be lower, at a rate of at least 10 percent, with continued strong cash flow and return on equity."

It is bad news when the government sees the need to investigate. Besides being a distraction, there is always the potential that bad news could snowball. But, given the company's operating performance and its anticipated long-term growth, today's spanking is way overdone.

Discuss Cardinal Health, McKesson,or your favorite stockswithother investors on the Motley Fooldiscussion boards.

Fool contributor W.D. Crotty owns stock in AmerisourceBergen (which should be spanked -- just for having such an ugly name).