Cramer's 'Mad Money' Recap: Making Sense of Earnings Season

For still other companies, like the oil and gas sector, determining gross margins may be almost impossible. For these giants there are multiple costs for drilling and getting the oil out of the ground, transporting and storing it, and refining it into finished products.

That's why so many big oil firms are breaking themselves up into separate companies with single functions. It's simply easier for Wall Street to determine what they do and how much money they'll be able to make, he said.

When it comes to gross margins, Cramer concluded, Wall Street wants consistency. Changes in gross margins often lead to changes in stock price.

Listen to Management

Cramer's next thing to look for on conference calls and earnings reports is a signal about the future, dividend boosts or catalysts to boost sales.

Far too often companies are enamored by stock buyback programs as a way to return value to shareholders, but far too often buybacks do nothing to raise share prices and only work to help management beat estimates. That's why Cramer said he vastly prefers dividends as a way to reward a company's shareholders.

With interest rates at historic lows for the foreseeable future, Cramer said dividends have taken on increased importance. That's why nearly 40% of the total return of the S&P 500 over the past 10 years has been dividends, and why Cramer has preached almost nightly on how reinvesting dividends can significantly boost a portfolio.

Cramer said he's always listening for management to talk about their dividends and the possibility of raising them in the future. In addition, he's also listening for what he calls catalysts, something that could boost a company's share price in the short term.

Catalysts come in all forms. For pharmaceutical companies, catalysts may be a drug that's entering Stage III testing or expanded uses for existing drugs they're already producing.

In the tech sectors, catalysts are often new products or technologies that should seriously boost business, he said. For pipeline companies, catalysts can be expansions of their network into new, lucrative areas, he added.

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