It was business as usual at Walgreen (NYSE:WAG) as the drugstore chain posted another quarter of double-digit sales and earnings growth. Current shareholders couldn't be happier, but this consistency is a double-edged sword for prospective investors.

Walgreen is indeed a consistent grower, with perhaps one of the more durable and impressive retail franchises in the U.S. Sales have grown about 15% annually over the past decade, and earnings have advanced close to 17% over this timeframe. The numbers have condensed only slightly over the past couple of years, but they still stand between 12%-15%. And earnings growth is expected to reaccelerate to 17% this year, based on average analyst figures.

Sounds great; why aren't investors piling into the stock? As with any great growth concept, the shares aren't cheap, trading at almost 24 times projected earnings -- they're also pricey by just about any other metric used to value them. Additionally, the company expands its store count at a rapid clip, so any cash flow it generates is reinvested back into new stores and maintaining those already in existence.

As a result, free cash flow, which many of us here at Motley Fool track closely, tends to be minimal, since capex levels are so high. Former Fool Whitney Tilson posted an explanation on how to adjust for maintenance and growth capex, but however you cut it, Walgreen seems expensive. I currently estimate that investors expect the company to grow at 15% a year over the next decade, based on where the stock is trading right now ($47.23).

Therefore, investing in Walgreen takes a slight leap of faith. If growth suddenly grinds to a screeching halt, the shares have far to fall, since the valuation is so high. The only serious risk I see on the horizon is if archrival CVS' (NYSE:CVS) acquisition of pharmacy benefit manager (PBM) Caremark ends up fundamentally altering the drug retail competitive landscape. But the jury is still out on how big the changes, if any, will be. And Walgreen has proven that opening free-standing drugstores is very convenient and widely embraced by local customers.

The way I see it, if you place some chips on the table and growth continues at a double-digit pace, in a couple of years, the stock won't be so expensive, based off your initial investment cost. I made the leap a couple of years ago, and after some ups and downs, I'm standing with a decent gain in the stock. Because of its lofty valuation, it would be hard to justify placing a big proportion of my portfolio in this one stock, but so far, so good.

In the second-quarter press release, management mentioned plans to operate 7,000 stores by 2010, or 24% above current levels. The drug retailing space is extremely crowded, with pure-play peers such as CVS, Rite Aid (NYSE:RAD), and Long Drug Stores (NYSE:LDG). Big-box behemoths such as Target (NYSE:TGT), Wal-Mart (NYSE:WMT), and Costco (NASDAQ:COST) also sell a ton of prescription drugs and other consumer goods, but so far Walgreen has found a way to stand above the competition and keep growth chugging along. The shares may be worth a look if you expect at least another decade of the same.

For related Foolishness:

Wal-Mart is a Motley Fool Inside Value recommendation and Costco is a Motley Fool Stock Advisor selection. With a free 30-day trial, you can see how these two newsletters are beating the market.

Fool contributor Ryan Fuhrmann is long shares of Walgreen but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.