'RealMoney' Radio Recap: Bank on Wells Fargo

You have to understand what earnings are, Jim Cramer told his "RealMoney" radio show listeners Thursday.

Ask yourself how much money you have after you factor in taxes and expenses, and that's your bottom line, he said. That amount could also be called your earnings; it's no different for a company.

Every publicly traded company, meaning one that sells stock, must report quarterly earnings, he said. They can pick what date they report, but they have to report every three months.

Not only do companies say how much they earned per share, they say how much their earnings have grown compared with the same period a year ago. Double-digit earnings, meaning 10% or more, are great, he said. And any growth over 20% is an "A+," he added.

He walked listeners through a couple of key earnings reports, noting that over 200 companies reported on Thursday, making it a day to really "take the temperature of the U.S. economy."

Among the bank stocks that reported, he pointed out that Wells Fargo(WFC Quote) reported 14% earnings growth, while Citigroup(C Quote) reported 4% growth.

Mortgage rates are up huge, but Wells Fargo said that consumer lending is still good.

Citigroup said that consumer lending is bad in this country, and that it's earnings growth was a result of investment banking business and foreign banking.

So, which bank should we believe about the state of the economy? Cramer said to believe the bank that delivered, Wells Fargo. The bank is doing something right when it comes to consumers. He also said that he would sell Citigroup because of its quarter.

"Yahoo!(YHOO Quote) came out with, frankly, a not great report," he said. Yet the stock jumped 9%. Cramer owns Yahoo! for his ActionAlerts PLUS charitable trust portfolio.

Intel(INTC Quote) looked like it had a decent quarter, but the stock did nothing.

Why? Cramer said it's because people thought Yahoo!'s quarter would be bad. So, when it turned out to be OK, people were pleasantly surprised and wanted to buy it.

However, Wall Street had expected a mediocre quarter from Intel, and that's what the company delivered. So, the stock didn't move on the earnings report, he said.