Dykstra: Reading the Earnings Tea Leaves

As the playoffs shake out, each team's performance is there for the world to see. On Monday, armchair analysts everywhere picked apart mistakes made by the defenses in the NFL wild-card-round losses last weekend.

The performance of public companies also gets a good deal of Monday-morning quarterbacking. But their stock prices are based as much on future performance, which can be much harder to predict. Earnings reports are all we really have to go on.

Earnings season will get going in just over a week, and we'll all be reading between the lines in the income statements for clues as to how individual stocks will fare over the coming year.

Given the market uncertainty, some companies may deliver full-year forecast ranges wide enough to steer a ship through. Some may say they can't give quarterly guidance. But there are other ways of reading between the lines.

An important number to look for at some companies is the deferred revenue total from the balance sheet. Not all companies defer revenue -- just ones that deliver their services or products over time.

A decade ago, companies that were more concerned about making their targets than reporting the actual numbers could dip into deferred revenue prematurely. That isn't easy to pull off now due to tighter restrictions on when upfront payments can be recognized as revenue.

In recent years, some companies have deliberately shifted their business practices to enable them to defer more revenue -- what some call their annuity business. The practice smoothes out sales over the course of a year or two and makes guidance easier to meet.

That's not a bad thing: It legitimately makes revenue more predictable.