What happened

Shares of Hewlett Packard Enterprise (HPE 0.27%) stock roared ahead 10.8% through 1 p.m. ET on Wednesday after the cloud computing company announced earnings last night that beat Wall Street's earnings estimates with a stick.

Heading into its fiscal first quarter of 2022, analysts had forecast that Hewlett Packard Enterprise (HPE) would earn $0.46 per share (adjusted) on sales of $7 billion. As it turned out, HPE only needed $7 billion in sales to earn $0.53 per share -- 15% ahead of expectations.  

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So what

Revenue may have only grown 2% year over year at Hewlett Packard Enterprise, but this was "in-line with our Q1 outlook," said management. More important is that order growth in the quarter was "strong" -- up 20% year over year.  

Moreover, HPE is earning improved profit margin on its sales, with gross profit margin under generally accepted accounting principles (GAAP) up 80 basis points at 33.7%. This implies that earnings going forward will be stronger as well.

And they were already pretty strong. HPE earned $0.39 per share under GAAP, which was 44% higher than the top of the earnings guidance range the company had previously given -- and 130% better than the company earned a year ago.

Now what

So what does the future hold for Hewlett Packard Enterprise? Management is forecasting full-year GAAP earnings of between $1.36 per share and $1.50 (with non-GAAP earnings of $2.03 to $2.17 per share). And free cash flow (FCF) could be as high as $2 billion this year.

On a $20 billion market capitalization, that works out to just 10 times free cash flow for Hewlett Packard. Granted, the shares are a bit pricier with net debt factored in -- about 15 times FCF. But if the company's 20% Q1 orders growth is any indication, HPE appears to be growing plenty fast enough to justify that valuation.

Maybe even fast enough to make HPE stock a buy.