LCA-Vision (LCAV), operator of laser vision correction centers, saw its shares fall nearly 25% during heavy trading this past Monday, on the heels of lowered 2006 earnings guidance.

Earnings are now expected to come in between $1.60-$1.70 per share, down from the previous guidance of $1.80-$1.90 per share. Analysts had been looking for earnings of $1.89 per share for the full year.

The company cited a miss in its advertising campaign as the reason for the earnings guidance downgrade. The $13 million marketing campaign failed to generate the expected number of appointments, leading to weaker sales.

Another factor weighing down LCA's shares Monday was the resignation of Kevin Hassey, the company's president, which was announced Friday. No reason was given for his departure but the company stated it had nothing to do with the earnings announcement.

After years of spectacular growth, both in sales and share price, the two announcements were obviously a hard pill to swallow for LCA investors. But with shares off by nearly a quarter, it begs the question of whether this sell-off has provided a good investment opportunity.

The good news is that the company's underlying business remains strong. Lasik eye surgery continues to remain one of the most frequently performed elective treatments in the United States, with an estimated 1.4 million procedures performed each year. This number should only increase over time due to not only an aging population but also since the procedure itself continues to gain wider acceptance as being both a safe and effective solution to near- and far-sightedness, along with astigmatism.

While the company did misstep in its advertising campaign, something most companies do at some point, its operational strength and growth continues to remain strong. For the first six months of the year, LCA-Vision has seen its revenues increase 41% on a year over year basis.

The earnings increase has transferred well into a similar increase in earnings, which were $23.9 million for the first six months of the year compared to $17.1 million in the same period last year. The company also generates strong cash flow, as it hauled in $32.9 million in operational cash flow over the first six months, which is up from $24 million in the same period last year.

If we take the low earnings guidance of $1.60 per share, the company is currently trading at 19.5x earnings, which is not too bad for a company that has seen average sales growth of 46% over the last three years.

Even with its recent missteps, the company is expected to see both revenue and earnings growth into 2007. Currently, without adjustment from analysts on the recent developments, earnings for 2007 are expected to come in at around $2.38 per share. If we take an extremely conservative stance of $2 per share in earnings for 2007, LCA-Vision is only trading at 15.5x earnings. Not bad for a company with a history of strong sales and earnings growth and an equally attractive amount of cash flow from operations.

The short-term could continue to be bumpy for the company, as it will need to show clear signs of improvement in its marketing campaigns in the future. Also, the sudden departure of its president is a cause for some concern, as these types of sudden moves can often be a sign of a much bigger problems.

But this large sell-off has provided a real opportunity for investors willing to take a little risk. This is a solid company with a strong macro-trend -- a company I think deserves a second look, especially with the recent sell-off.

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