Proto Labs (PRLB 30.29%) stock jumped 34.1% through 12:05 p.m. ET Friday after beating analyst projections for Q3 sales, and crushing on earnings.

Heading into the quarterly report, Wall Street had forecast Proto Labs would earn $0.32 per share on $121.4 million in Q3. In fact, sales were $125.6 million, and Proto Labs reported a $0.47-per-share profit -- nearly 50% more than it was supposed to earn.

Proto Labs' Q3 sales and earnings

Now, not all the news was good. Proto Labs may have earned $0.47 per share pro forma, but its earnings as calculated according to generally accepted accounting principles (GAAP) were significantly lower -- $0.29 per share. That marked a 6.5% decline in profits from one year ago, and revenue fell nearly 4%.

Still, this all appears to have been better than Wall Street was anticipating.

CEO Rob Bodor called the results "solid ... despite continued dynamic challenges in the manufacturing sector" that depressed revenue in the quarter. CFO Dan Schumacher further observed that the 3D printing services provider produced its best free cash flow since 2020 in the quarter, lifting the company to $52.2 million in cash profits generated so far this year.

Is Proto Labs stock a buy?

Management forecast Q4 sales between $115 million and $123 million, with GAAP profits between $0.10 and $0.18 per share. At the midpoint, this implies Proto Labs will end 2024 with $498 million in sales, and about $0.81 per share in profit.

By my calculations, this means Proto Labs currently costs about 45 times current-year earnings, which seems pricey considering that the company isn't growing earnings at all. On the plus side, assuming Proto Labs continues generating free cash flow at its current pace, the company could end up with $70 million in cash profits this year. On a $690 million market cap, that works out to a price-to-free-cash-flow ratio of less than 10. Valued on that metric, Proto Labs stock looks a whole lot cheaper -- maybe even cheap enough to buy.