What happened

Shares of Seagate Technology (STX -1.16%) exploded nearly 10% higher Thursday -- up 9.7% as of 12:35 p.m. ET -- after the maker of computer memory crushed analyst projections for fiscal Q2 2023 earnings last night.

Instead of the $0.10 per share in earnings and $1.83 billion in sales that Wall Street expected, Seagate reported an adjusted (i.e., non-GAAP) profit of $0.16 per share on sales of $1.89 billion.  

So what

Not all of Seagate's news was great. The $0.16 per share non-GAAP profit, for example, stands in stark contrast to what the company actually earned when profits are calculated according to generally accepted accounting principles (GAAP). As it turns out, the GAAP number for the quarter was a loss of $0.16 per share.

That's quite a difference. It's also quite a comedown from the $2.23 per share in GAAP profits that Seagate earned in last year's Q2.

On the plus side, the company said it generated positive free cash flow of $172 million in the second quarter, bringing its total year to date to $284 million in free cash flow. On the minus side, that number was also much lower than the $805 million in positive free cash flow that it generated in the first half of last year.

Now what

Clearly, things aren't going great for Seagate. Still, CEO Dave Mosley insists that it is "effectively managing through a tough macroeconomic environment." Whether the company will be able to continue doing so, however, remains an open question -- even to Seagate.

Giving guidance for the third fiscal quarter of 2023, currently underway, Seagate told investors to expect non-GAAP earnings of anywhere from $0.05 to $0.45 per share. That's an incredibly wide range of potential profits. Revenue will vary as well, but only between a narrower range of $1.85 billion and $2.15 billion.

If there's good news for investors here (and given the spike in share price today, I think it's safe to say investors are taking this as good news), it's that Wall Street is only expecting Seagate to produce $1.86 billion in revenue in Q3. Given that this is basically the bottom of the company's guidance range, it therefore seems all but certain that Seagate will exceed expectations again in Q3.

Is that good enough reason to buy Seagate stock today? At a debt-adjusted valuation of 29 times earnings today -- or even at a more generous  enterprise-value-to-free-cash-flow ratio of 24 -- I personally feel that Seagate stock remains overpriced, and would not be a buyer.

But it would appear I'm in the minority in holding this opinion today.