Ultra-hyphenated semi-and-solar-wafer-maker MEMC Electronic Products (NYSE:WFR) (get it? WaFeR?) reported its Q2 results late Wednesday evening ... and paid the price dearly.

Although yesterday's pair of upgrades from Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) (plus, one presumes, a bit of position-closing by the short-sellers) is helping to repair the damage, the stock still sits a good 16% below its pre-earnings heights. Yesterday, I explained why I believe Citi and JP are calling this one right -- basically, because MEMC has become too cheap not to own. Today, let's take a closer look at the earnings report that spooked the market into driving the shares down to these levels in the first place.

On its face, the news really wasn't that bad. Sales for the fiscal second quarter were up a respectable 12% over Q2 2007 levels. Profitability expansion magnified the sales gains, as MEMC added 120 basis points to its gross margin, and operating efficiencies tacked on another 50 b.p., leaving MEMC with an enviable operating margin of 45.6% for the quarter. By way of comparison, downstream chipmakers like Intel (NASDAQ:INTC) and Texas Instruments (NYSE:TXN) rake in operating margins in the mid-20s, while Motley Fool Rule Breakers recommendation and solar cell manufacturer Suntech Power (NYSE:STP) scores in the low teens, and the "solar maker with the funny name," Solarfun (NASDAQ:SOLF) makes do with a sub-10% operating margin.

What's more, unlike the solar shops named, MEMC actually makes free cash flow on its sales -- $118 million in the second quarter, bringing its trailing-12-month total to more than $560 million.

Comedy of errors
So what is it that has a stock, expected to grow in the upper-20s every year over the next half decade, selling for a little more than 18 times trailing free cash flow? Apparently, it boils down to the fact that MEMC got hit by a pair of freak events during the quarter: the failure of a heat-exchanger at MEMC's Merano facility in Italy, and a loose pipe fitting at a plant in Pasadena, which combined to crimp Q2 revenues slightly, disappointing the Street.

Having missed its mark once, management spoke cautiously of its plans for Q3, and walked back sales guidance to what will hopefully prove a conservative range of $560 million to $620 million, even as it guided to sequential growth in gross margins. For the year, management targets sales growth in the low-to-mid 20s.

That's less than investors were hoping for, sure. But we're still talking 20% plus growth rates on an 18 P/FCF stock. To this Fool, that spells "B-U-Y."

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Fool contributor Rich Smith does not own shares of any company named above, but Suntech is a Motley Fool Rule Breakers pick and Intel is a Motley Fool Inside Value selection. JPMorgan Chase is a Motley Fool Income Investor pick. The Motley Fool has a disclosure policy.