Pinch me, please. Am I dreaming, or do I really see a patented David Gardner recommendation for Motley Fool Stock Advisor selling for 6.5 times forward earnings estimates?

Thanks to Tuesday's earnings miss, LASIK surgery specialist LCA-Vision (NASDAQ:LCAV) is now trading for about nine times trailing earnings (significantly less than rivals TLC Vision (NASDAQ:TLCV) or NovaMed (NASDAQ:NOVA)), and 6.5 times what analysts guesstimate it will earn next year. Meanwhile, these same analysts predict the firm will grow its earnings at about 16% per year for the next five years. Can you say bargain?

Of course, no stock falls 44% in just a few days for no reason, and even yours Fool-y must admit that Tuesday's news was not great. Procedures performed during the quarter grew a bare 5%, suggesting that the market for laser-doctored peepers may be approaching the saturation point. Add to this management's comments about "headwinds due to softness in consumer discretionary spending and tightening credit markets," and its decision to stop issuing guidance at the same time as it predicted profits "significantly below the $0.27 we reported in the fourth quarter of 2006," and what you get is a growth story that needs a pair of rosy glasses to be seen.

Foolish takeaway
All of which leads us to the apparently nonsensical question: Is a stock trading at a 0.7 PEG ratio "cheap"? The answer, it seems to me, is still yes. Let's take the next-to-worst-case scenario and see where it leads us. Let's say the growth story is over. That LCA will not grow again, ever. If the firm can just continue generating cash profits at the rate it's done so far this year, it will end fiscal 2007 with $36 million in free cash flow.

At that rate, LCA carries an enterprise value of less than six times free cash flow. Which means that in six years' time, assuming no increase in the stock price, LCA's market cap could theoretically equal its cash in the bank, and the business be valued at zero. To me, that sounds like an attractive proposition, with little downside to it (barring the worst-case scenario, in which free cash flow should actually decline).

On the other hand, what would happen if LCA should, at some time within the next half-decade, find a way to grow again? Why, that would make LCA an out-and-out bargain.

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.