In general, when a company posts a sales gain of 5.9% and an earnings per share gain of 9.5%, I consider it fairly good news. But in the case of Motley Fool Inside Value selection Anheuser-Busch (NYSE:BUD), which posted those results yesterday afternoon, I'm not so impressed.

For those interested in more of the financial comparisons to last year, the Fool by Numbers, published earlier today, can be found here. In this space I'm going to take a look at the company's second-quarter results over the last few years instead of just the year-over-year comparison, because I think it sheds a bit more light on the company's performance.

Q2 2004-2006 Performance

Metric Q2 2006 Q2 2005 Q2 2004
Sales 4,256

4,018.1

 4,010
Op. Income 881

826.1

1,024.5
Net Income

637.8

593.6

673.5
Gross Margin

37.48%

38.28%

41.9%
Op. Margin

20.7%

20.56%

25.55%
Net Margin

14.99%

14.77%

16.8%
Data from Capital IQ, a division of S&P.

Looking at the extra year's worth of data is a bit more helpful as it reveals that improvements were certainly made, but the company still has a ways to go to get back to its better-performing years. The question becomes whether that is possible with competitors such as SABMiller, Boston Beer (NYSE:SAM), and Molson Coors BrewingCompany (NYSE:TAP) to contend with.

For my money, the margin erosion and competition are a concern, but the larger concern is the company's free cash flow and whether or not it can get back to growing it. Through the first half of the year, there is some hope, as operating cash flow was slightly higher and capital expenditures were quite a bit lower. If capital expenditures remain that low, it would be below the company's average of the last few years. In fairness, last year's capital expenditures were unusually high, so a return to normalcy is somewhat expected.

In the end, it's not the quarterly performance that matters as much as the valuation of the company, given its earnings power. Doing a back-of-the-envelope analysis, I value the company in the low $50s. A few of my colleagues here at the Fool have slightly more optimistic expectations, and that's probably because I'm warier of competition. Either way, this is a company that sells a staple at a reasonable valuation and 2.3% yield. All things considered, that's not a bad deal.

Are you looking for irresistible values? Check out Philip Durell's latest value picks by taking a 30-day free trial to Motley Fool Inside Value .

At the time of publication Nathan Parmelee had no interest in the companies mentioned. The Motley Fool has an ironclad disclosure policy.