I love companies that have no earnings, such as Audible (NASDAQ:ADBL). It can be a lot of fun to watch these stocks yo-yo between ridiculously cheap and wildly overvalued. But how do we know whether the stock is actually cheap? The obvious answer: We work a little harder to understand exactly how the business will make profits in the future. I focus on several key factors: levels of sales growth (since it's tricky to get a fix on margins), subscriber or customer growth and turnover, and marketing costs.

With that in mind, let's examine the Q4 and FY 2005 results that Audible released yesterday:

  • Sales were $63 million for the year, an 83% year-over-year increase. Fourth-quarter revenues came in at $18 million, meeting the low end of diminished estimates. The company posted a revenue shortfall on a botched integration of its new website. The glitches have been worked out, but the timing was less than ideal, since it occurred in the midst of the holiday season. Still, even a botched quarter provided a 73.5% increase in revenues.

  • The company's total subscribers surpassed the 300,000 mark in 2005, a year-over-year increase of 67%. Though fourth-quarter acquisitions didn't meet expectations, the overall numbers were very strong.

  • Customer churn rose to 5.7% in the third quarter. Management chalks it up to a free trial promotion in the first half of the year; many customers signed up but didn't stick around. Churn clocked in at 4.6% for the fourth quarter, and first-quarter numbers are down slightly thus far -- both relative positives.

  • On an annual basis, marketing expenses tripled, and cost per acquisition jumped to $68 from $43. Management stated that it expects future customer acquisition costs to drop significantly as individual awareness increases. The resolution of problems associated with Audible's site launch should also help boost the efficiencies of marketing initiatives.

Fellow Fool Jim Mueller did a discounted cash flow calculation on Audible last week, in which he valued the shares around $11 to $20. Given the prospect of reduced marketing expenses, free cash flow will likely get a bit of an injection. So listen up, Fools: With the stock now trading just above $9, I'd consider these shares relatively undervalued.

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Foolish contributor John Bluis owns shares of Audible (and a cheesy MP3 player). The Motley Fool has an ironclad disclosure policy .