Gee whiz, people. What's it take to make an investor happy these days? I mean, you know Mr. Market's grumpy when a company comes out and reports 42% sales growth, and a 53% bump in profits -- and its stock takes a 7% dive.

Granted, not all of FLIR Systems' (NASDAQ:FLIR) good news last week was of its own making. But of the 42% increase in Q2 sales year over year, fully 32% was organic growth. Only the last 10% came from new revenue streams tacked on from its purchases of Extech Instruments and Cedip Infrared last year.

Still, this high-tech optics specialist did all the things Wall Street usually likes to see in a company reporting earnings news: It grew sales. It expanded profit margins. (The firm's 24.8% margin year to date is slightly ahead of trend, and way better than the mid-teen margins more common among rivals like Axsys (NYSE:AXYS), Excel Tech (NASDAQ:XLTC), L-3 (NYSE:LLL), or Lockheed Martin (NYSE:LMT). It beat estimates. It raised guidance -- predicting as much as $1.1 billion in revenues for this year, and perhaps $1.25 per share in profits. What more do investors want?

Cash, please
As beaucoup as accounting earnings appeared -- and appear likely to continue appearing -- perhaps what disappointed investors was the surprising dearth of free cash flow at FLIR. While the company has not yet released a full cash flow statement on the quarter, it did confide that operating cash flow came to a mere $8.2 million; capital expenditures ate up $6.1 million of that, leaving the firm with just $2.1 million in free cash flow. That may have been a huge improvement from the negative $16 million free cash flow number that FLIR presented in Q2 2007. However, FLIR still has valuation issues.

Even after Q2's anemic cash generation, FLIR has amassed $108 million in free cash flow over the past 12 months. But that may not be sufficient when compared with GAAP earnings over the same time period of about $164 million. Investors nervous at the company's nosebleed valuation of 42 times trailing earnings could be forgiven for panicking upon realizing that the price-to-free cash flow ratio now sits north of 50 times.

Forgive me for saying so, Fools, but that seems just a little bit rich for an expected 20% long-term grower.

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Fool contributor Rich Smith does not own shares of any company named above, but Axsys is a Motley Fool Stock Advisor selection. The Motley Fool has a disclosure policy.