Today is a great day to be a Sierra Wireless (NASDAQ:SWIR) shareholder. The machine-to-machine specialist's shares are up nearly 19% in after-hours trading thanks to an excellent third-quarter earnings report. Analysts had expected $138.8 million in revenue and $0.13 in adjusted earnings per share, but Sierra blew past these marks with $143.3 million in revenue and adjusted EPS of $0.24. This strong showing looks to continue in the fourth quarter, as Sierra now expects revenue to range from $145 million to $148 million, resulting in adjusted EPS of $0.25 to $0.28 -- both ranges come in well above Wall Street's expectations for $142.4 million in revenue and $0.17 in EPS.

It's pretty easy to see why the market has pounced on Sierra's shares following this report if you take a look at its recent top- and bottom-line progress, including its fourth-quarter guidance:

Sources: Sierra Wireless earnings reports.

Sources: Sierra Wireless earnings reports.

While Sierra's revenue doesn't look like it will grow quite as fast in the fourth quarter as it did in the third quarter, it should still come through with the second-highest year-over-year growth rate of Sierra's post-AirCard era. Sierra's bottom line, however, is rocketing higher, and looks to set not only its second consecutive post-AirCard record for quarterly adjusted EPS, but its second consecutive record for year-over-year growth as well in the fourth quarter. This is great news for investors who have waited most of the year just to get back to even, as concerns had cropped up throughout the year over the company's ability to ride a trend that's still more theoretical than real -- the Internet of Things. Today's strong report should help put those concerns to rest, at least for the time being.

Sierra also produced excellent results on a less-watched but no less important metric: free cash flow. Thanks to $26.7 million in free cash flow this quarter, Sierra has boosted its cash on hand to $196.1 million, which is a record size for the company's war chest. Sierra has not been able to generate positive free cash flow consistently over the past few years, but this is its largest haul by far of the post-AirCard era, and is another good indication that the company's decision to focus on the Internet of Things will be long-term profitable.

The only real spot of "weakness," if it can be called that, is underwhelming growth in Sierra's Enterprise Solutions segment. I highlighted this segment as a good source of high-margin opportunity for the company in my earnings preview earlier this week, but Enterprise Solutions only improved its revenue by 15.4% year-over-year, which is a worse growth rate than seen in all but two other quarters of Sierra's post-AirCard era. OEM Solutions, which is Sierra's bread and butter, grew at a record rate of 29.7% year over year, which more than made up for somewhat modest enterprise growth, but enterprise sales are far higher-margin than OEM sales, which is why investors should hope that Sierra can ramp up its smaller segment going forward.

Sierra is growing fast, but it's not cheap, as its forward adjusted P/E is now 51 after accounting for the stock's after-hours pop as well as Sierra's forward guidance. Sierra's shares do look a bit more reasonable on a trailing price-to-free-cash-flow basis after today's big cash flow numbers -- $25.4 million in free cash flow over the past four quarters works out to a price-to-free-cash-flow ratio of roughly 39 when accounting for the stock's after-hours pop. This is far from outlandish for a company that seems poised to grow rapidly into the future, and an investor can find plenty of companies with riskier prospects trading at worse valuations today.