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Yesterday, Ternium (NYSE:TX) announced Q2 earnings and today the market is proving that no good deed goes unpunished. The company has generated $382 million in free cash flow in the first half of 2010. Net income for the quarter was $187 million. Shipments (6%), revenue (17%), and operating income (22%) all rose vs. Q1.

The benefits from Sidor, the confiscated Venezuelan subsidiary, continue to flow as the Chavez government pays off its $1.9 billion debt to Ternium. $263 million was paid in May, bringing total payments to $1.5 billion. Ternium still expects to collect $446 million (approximately $200 million on/about August 9th and the remainder on/about November 7th).

Even without this cash, Ternium's balance sheet showed $2.6 billion of cash against $2 billion of debt. Result: $600 million of net cash, even after a $138 million June dividend payment.

Yet for all the good news, Ternium still garners a market value of only $6.8 billion.

Over the next 13 weeks, Ternium should collect its remaining debt from Hugo. This cash plus any free cash flow should push net cash over $1 billion by year-end.

In the meantime, Ternium continues to retire maturing debt (including $250 million in July) and pay periodic dividends with its flood of cash. Investors can't ignore this forever.

Disclosure: Author owns TX shares.

Source: Ternium: Still Undervalued