Investors in The Fresh Market (UNKNOWN:TFM.DL) have learned the hard way that no matter how sound a company or how appealing its sales growth, valuation can keep a tight lid on returns. The Fresh Market is a phenomenal grocery store and is growing fast, with 10 new stores opened in the just-ended quarter. Its future is nearly guaranteed to be bright, as long as management sticks true to the original vision. The problem right now is that Mr. Market awarded The Fresh Market with a valuation somewhere in the thermosphere, and it allowed for little to no room for unforeseen events -- such as a tepid economic recovery.

Earnings recap
Given the stock's near-20% slide in Friday's trading, it would be easy to believe The Fresh Market delivered a dismal quarter. Really, though, it wasn't. Sales rose 14% year over year to $364.5 million. Net income didn't show much growth -- about $200,000 more than in 2012, while earnings per share remained frozen from the year-ago period at $0.23. Analysts, though, wanted $0.26 per share and north of $370 million in revenue.

Same-store sales bumped up 3.1%, while gross margin expanded 40 basis points. Further down the income statement, margins took a hit from increased SG&A expenses.

Looking ahead, Fresh Market management expects full-year fiscal 2013 EPS in the range of $1.42 to $1.47 per share. Previously, the company had guided $1.50 to $1.55 per share.

The market did not take any of this news well, and has punished the stock accordingly. Including today's drop, the stock is down close to 20% in 12 months. Prior to today, it had been nearly flat.

How can a company that is set to open more than 20 stores this year and increase comparable sales (top- and bottom-line boosters) be performing so poorly on the market? Should investors take a step back?

Reasonably valued today
Though it is by no means a cheap stock, The Fresh Market, for the first time in a while, looks like a buy at less than 22 times forward earnings. This company is growing fast. The market fell for it too hard, too soon, and it's been paying the price for several months. Now that valuation is back in the realm of reason, investors have an opportunity to earn some alpha.

The Fresh Market has some debt on its books and not a ton of cash -- about $36 million in long-term borrowings with a little under $15 million in cash. But, in this high-growth phase, investors have nothing to worry about. The company's cash flow is strong and management is pouring everything it can back into the business. In a few years, when the store count has built out substantially and the company reaches greater scale, investors may see this stock really flex its muscles.

The Fresh Market is a long-term growth pick and, as of today, a great candidate for a buy.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends The Fresh Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.