Pick a lane, TheStreet.com (NASDAQ:TSCM). You can't have it both ways.

Reporting second-quarter earnings last week, TheStreet.com chose the following as its subheadline: "Expanding Network Drives 32% Year-Over-Year Revenue Growth." While that's true, there’s more to the story. Revenues were up 32%, but profits were down 38%, at just $0.07 per share. How does that work?

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TheStreet posted $19.7 million in revenue last quarter -- 32% growth. Impressively, TheStreet achieved this feat while upping its marketing spending only 19%. Unfortunately, pretty much every other category of spending rose much faster:

  • Cost of services? Up 48%
  • General and administrative spending? Also 48%
  • Overall operating costs? You guessed it: 48%

Meanwhile, depreciation and amortization spending leapt 263% year over year. Now, management would rather you pay no attention to this 263% behind the curtain. In its press release, TheStreet emphasized a concept it calls "adjusted EBITDA" (a close cousin of "EBE" --  "earnings before everything"). Later, self-reporting its results, TheStreet.com editorial explained away these costs as "related to business combinations" and mere "noncash charges."

But here's the thing, guys. You can't crow over 32% revenue growth, most of which was "bought" growth, and then turn around and disclaim the cost of buying it -- amortized or otherwise. It just ain't kosher.

Or necessary
In fact, TheStreet doesn't need to play semantic games to defend its stock price. After falling nearly 45% over the past year, the stock is finally starting to look reasonable.

Advertising revenue is holding up well, Promotions.com continues to ink deals with partners as diverse as Coke (NYSE:KO), Time Warner (NYSE:TWX), McDonald's (NYSE:MCD), and Verizon (NYSE:VZ), and the company just expanded its relationship with Google's (NASDAQ:GOOG) YouTube. So far this year, it's all added up to $0.14 per share in net profit, and $4.5 million in free cash flow (FCF).

Now, run-rate these numbers out through the end of this fiscal year, and you get perhaps $0.28 in profits, or $9 million in FCF. Either way you look at it -- P/E or price-to-free cash flow -- the stock looks like it's trading for about a low-20s multiple. Assuming TheStreet can meet analysts' expectations for 20% long-term growth, that's not even a remotely unreasonable price.

For more news on TheStreet.com, read:

Google is a Rule Breakers selection, and Coca-Cola has been recommended by Inside Value. Try either service free for 30 days.

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