It's now possible to see the results of the network's growing popularity among advertisers. Last year, AMC Networks brought in $1.2 billion in revenue, up 57% from 2007. Profits were up even more sharply and have jumped more than eightfold from $0.22 to $1.79 per diluted share. Analysts project steady revenue growth of about 8% in each of the next two years, and earnings per share of $2.24, a growth of more than 25%. They project another 25% bump in 2013 to $2.79 per share. It's important to note that reported earnings generally understate the true profit-generating potential for media firms. It's crucial for AMC to create new programs consistently, and they require heavy upfront costs. They also represent a competitive advantage that smaller content providers on the Internet are unable to match. For AMC Networks, these development expenses come through as costs each year on the income statement, but the cash has already been spent. Because there's no real cash outflow, the actual free cash flow generated is actually quite a bit higher. In 2011, for instance, AMC Networks reported $126.4 million in earnings, but free cash flow was just a hair below $240 million, or about $3.40 per diluted share. Overall then, the reported price-to-earnings ratio appears quite high at 24, but the price-to-free cash flow multiple -- which I think is the more accurate metric for viewing this company -- is more reasonable at just shy of 13. This is still above the market average multiple of 9, but AMC Networks deserves a premium because it is growing quickly. Risks to Consider: The viewing of TV shows is still predicted to migrate to the Internet and related mobile devices, a trend that's expected to further impede on TV networks and eventually eat into cable viewership. But it has already been almost 10 years since this prediction was made, and it has yet to come true. Cable TV networks have done a stellar job of maintaining their viewership and will probably find profitable ways to migrate with its customers to the Internet. Action to Take --> Right now, AMC Networks is expected to grow cash flow by 9% annually. I actually believe it has the potential to grow closer to 15%. This is based on the continued success of its popular series and steady growth of new, high-quality content. Management's track record of hits has certainly been impressive so far, so it has a good chance of continuing the streak. Based on of my projected growth estimates, I find that the share price of AMC Networks is undervalued by about 45%. That means the stock could surge to $62, which I think is achievable within a couple of years.