BMC Software (NYSE:BMC) released its fiscal third-quarter earnings after the market closed on Tuesday, and at first glance, the numbers seem to add up to a value for investors, if not exactly a great growth opportunity. But is there more to the story?

First, while operating income increased 133% to $52.5 million and net earnings grew by 29%, coming in at $46.9 million (or $0.22 per diluted share), total revenues for the quarter did decrease by 2% to $380.3 million. That net-earnings number for the quarter was driven by a reduction in costs -- there wasn't much top-line expansion.

Meanwhile, for the nine-month period, total revenues increased 2% to $1.09 billion, and operating income jumped 87% to just below $70 million. However, net earnings clocked in at $48.6 million ($0.22 per diluted share) -- a 19% loss.

BMC just doesn't scream "growth story" right now. Revenue bases shrank for its licenses and professional services categories. The maintenance segment did enjoy a 9% increase, but that doesn't excite me much.

When looking for potential long-term investments, I like to find companies generating increasing amounts of free cash flow -- but at BMC, it's been slowly declining. If investors believe that BMC is a solid company that can eventually turn its top line around, they need to examine what kind of valuation the shares hold at the moment.

On an enterprise value-to-free cash flow basis, BMC has a trailing-12-month multiple of less than 10. That seems cheap. What's more, BMC's balance sheet has no debt and a lot of cash, and the shares have been strong over the past year. So perhaps Wall Street is predicting better growth ahead. The company certainly is, having raised its non-GAAP guidance for the third time in a row. (Keep in mind, that's non-GAAP.)

I choose to reject this investment story. BMC just doesn't have the kind of cash-generation skills that I want to see. And besides, why go for BMC when you can go for, say, Microsoft (NASDAQ:MSFT)? Investors must always consider the alternatives when evaluating stocks. And to me, there are a lot of alternatives to this investment idea, even with its valuation.

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Fool contributor Steven Mallas owns none of the companies mentioned. The Fool has a disclosure policy.