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SPS Commerce (NASDAQ: SPSC) stock is making huge gains in Friday's trading. The supply chain software company's shares were up 16.5% as of 2 p.m. ET, according to data from S&P Global Market Intelligence.

SPS Commerce released its fourth-quarter results after the market closed yesterday. Sales and earnings for the period beat Wall Street estimates. The company recorded non-GAAP (adjusted) earnings per share of $0.75 on revenue of $145 million, topping analysts' average estimate for per-share earnings of $0.70 on sales of $142.79 million.

Strong business momentum has investors feeling bullish

SPS' revenue increased 18.9% year over year in the fourth quarter, and recurring revenue jumped 19% compared to the prior-year period. Meanwhile, adjusted earnings per share were up approximately 19%.

The company closed out last year with 44,800 recurring revenue customers, good for an increase of 6% year over year. But thanks to rising spending from those already using its services, recurring revenue was up 20% annually. Overall revenue climbed 19% to hit $536.9 million, and full-year adjusted earnings per share grew roughly 21% to $2.85.

What comes next for SPS Commerce?

For the first quarter, SPS is guiding for sales of $145.9 million to $146.7 million. Meanwhile, adjusted earnings per share are projected to be between $0.72 and $0.73.

For the full year, management is targeting sales between $616.5 million and $619 million, which would equal growth of 15% at the midpoint of the guidance range. Adjusted earnings per share for the year are forecast to come in at $3.11 to $3.13, increasing 9.5% at the midpoint. Management also said that it continued to expect annual sales growth of 15% or more beyond 2024.

SPS stock is now up roughly 56% over the past year, and it is valued at roughly 12.7 times average sales expectations and 67.7 times average earnings expectations for 2024. That's a heavily growth-dependent valuation -- particularly in light of management's earnings growth target for the year. On the other hand, SPS appears to have a foundation in place that will help it capitalize on much larger long-term opportunities in the expanding supply chain software industry.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SPS Commerce. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.