Shares of Applied Materials (NASDAQ:AMAT) bounced around like an inverted yo-yo last week, popping 14% after earnings came out Wednesday evening, only to give back most of the gain as the week drew to a close.

Now granted, everything popped on Thursday. Didn't matter if they were listed on the NYSE or the Nasdaq, or reported good news or bad. Even giants like JP Morgan Chase and ExxonMobil leapt around 8% and 9% on the day. So a bit of a walkback Friday was to be expected -- but 10%?! That's crazy talk. Fools, Applied Materials delivered superb news last week. The fact that Wall Street is giving you a second bite at the apple, a chance to buy at near the pre-earnings price, should be cause for rejoicing. Here's why:

First, the bad news
At the headline level, you'd be hard pressed to call Applied Mat's fiscal 2008 anything but a poor performance. Sales plummeted 16% for the year. The operating margin shed around 800 basis points to end at 16.4% (on par with Lam Research (NASDAQ:LRCX)). And the diluted earnings per share plunged about 42% to just $0.70 per share.

And yet, while most market pundits busied themselves reading into Intel's (NASDAQ:INTC) earnings warning the end of semiconducting as we know it, and downgrading Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) in response, over at Applied Mat, they're starting to see a glint at the end of the tunnel.

Bottoms up?
Consider: In the final quarter of Applied Mat's fiscal year, sales amounted to just $2.04 billion. But the company took in new orders of $2.21 billion -- more than enough to replace the sales booked in Q4, and quite possibly enough to get sales growing again next year. Backlog of work to be done now stands at $4.85 billion -- 33% higher than at the end of last fiscal year, implying future sales growth.

Furthermore, heading into fiscal 2009, Applied Mat's CEO promised to "implement further cost-reduction actions" that could produce annual savings of as much as $400 million -- thus impliedly answering the unvoiced rhetorical question: What goes great with better sales? Improved profit margins.

Foolish takeaway
Do I even need to say it? Trading for less than 10x trailing 12 months free cash flow, with analysts predicting 10% long-term profits growth over the next half decade, and backlog trends supporting these growth predictions, Applied Materials looks cheap.

Apply yourself to researching the company further:

Fool contributor Rich Smith does not own shares of any company named above. Why do we tell you this? Because The Motley Fool has a disclosure policy.

JPMorgan Chase is a Motley Fool Income Investor pick. Intel and Dell are Motley Fool Inside Value selections. The Fool owns shares of Intel and covered calls..