Cramer shares insights to help make sense of this earnings season

Cramer said he looks at a company's revenue and earnings before interest, taxes, depreciation and amortization, or EBITDA.

Cramer shares insights to help make sense of this earnings season

CNBC's Jim Cramer shares some tips on how to identify winning companies in this earnings season.

Cramer categorized the names that he was watching: consistently good quarter (or continual excellence), first quarter of excellence, last quarter of failure, first quarter to fail, and confusing quarter.


Jim Cramer

Knows that executives rarely raise the alarm when there is a problem at their company. On Tuesday, he pulled back the curtain and explained what earnings reports could mean for stocks.

Cramer categorized the companies that he is watching into four categories: consistently good quarter (or continual excellence), first good quarterly, last bad quarter first bad quarter.

Cramer explained: "It may seem cumbersome but it's the real behind-the scenes nomenclature used by fund managers." You have to know what you're dealing with before you buy or sell.

Cramer listed homebuilder as one of the companies experiencing "continuously good quarters."


Paint maker


He said that Sherwin Williams is doing well despite Federal Reserve's tightening. Sherwin Williams is also benefiting from a high demand for paint, and the continued drop in raw materials costs. He also stated that

General Electric

Google parent


This category includes:

Cramer then moved onto "first good quarter" to highlight

NXP Semiconductors

He said that "had a harder time with it," but


A better-than expected quarter was reported on Monday. The company's multi-billion dollar "

forever chemicals" litigation

Cramer stated that the company has raised its expectations for the full year.

He also mentioned the pharmaceutical and health care companies



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Cramer believes the company's "last bad quarter" could be a good time to buy.

Cramer says that if you want to maximize your investment, you need to try to predict the next bad quarter. This means investing before the management has said the business is at its lowest point.

Cramer points to aerospace giant


The engine recall is likely to be the cause of a "first poor quarter" for, which was formerly Raytheon Technologies. Cramer said that the company has a "mammoth" order book and strong organic growth. He believes this could be an anomalous quarter.

Cramer also discussed "confusing quarters", such as

GE HealthCare

He suggested that the market may be wrong because it contributes to Alzheimer's treatments.

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Disclaimer CNBC Investing Club Charitable Trust owns shares in GE HealthCare Alphabet, and Danaher.

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