In investing, as in life, it's the little imperfections that truly set off a thing of beauty. The one flaw in an otherwise perfect diamond. The sole cloud in a robin's-egg-blue sky. And the absence of a cash flow statement in Scientific-Atlanta's (NYSE:SFA) fiscal Q1 2006 earnings report.

But for that little defect, I'd be tempted to call the report perfect. Once again, the company headlines its report matter-of-factly: "Scientific-Atlanta Announces First Quarter Results." No mention of "record earnings," "most sales ever in a first quarter," or any similar hype. Just the facts. The company heads right into specifics: $0.39 in per-share profits (up 8% from last year) and $490 million in sales (likewise, up 8%). That's followed by a by-the-numbers recitation of bookings, sales, gross margins, and so on, noting how most every line item is up since the year-ago quarter, and then immediately pointing out how most of them are also down sequentially. In other words, there's zero spin going on in this document. No effort to hide "bad" facts or tilt the prose toward the positive.

Not that I'd necessarily call the sequential revenue declines "bad news." One glance at the company's earnings history (registration required) shows you that in each of the past two years, the company's revenues and earnings have declined sequentially between Q4 of one year and Q1 of the next. You really have to look to find bad news at this company. For instance, the worst I could find was that accounts receivable growth outpaced sales growth year-over-year, with A/R rising 10% against the 8% sales increase.

Finally, the company dropped a heavy hint that it intends begin repurchasing its shares soon. Chairman, President and CEO Jim McDonald noted that because management possessed (unspecified) "material non-public information," it had been precluded by SEC regulations from repurchasing its shares in the past. That suggests that the company sees its shares as undervalued.

For the record, I agree. Currently trading at 19 times last year's free cash flow, and carrying a hefty $1.5 billion in cash on its books, the company trades at about a 10% discount to rival NDS (NASDAQ:NNDS), 30% off the price of Motorola (NYSE:MOT), and, according to the Motley Fool's discounted cash flow calculator (free for all subscribers to Motley Fool Inside Value), about a 10% discount to its intrinsic value as well. That's assuming growth rates of 15% for the first five years, 10% growth for the next five years, and 3% growth thereafter.

While it's not a screaming buy, Scientific-Atlanta does appear to offer a fair bargain at its current price.

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Fool contributor Rich Smithhas no position in any of the companies mentioned in this article.