Cramer's 'Mad Money' Recap: A Season of Expectations

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NEW YORK ( TheStreet) -- This earnings season has nothing to do with earnings, Jim Cramer told "Mad Money" show viewers Monday. It's all about expectations.

Cramer said the roller-coaster action investors are seeing in some stocks has nothing to do with a company's revenue or earnings, but rather with the expectations management has set going into the quarter.

Case in point: Caterpillar ( CAT), a stock Cramer has been buying up for his charitable trust, Action Alerts PLUS . Cramer said despite reporting hideous results with an outlook to match, shares rallied. Why? Because for the first time in ages Catperillar management did not say "things were getting better" when they clearly aren't.

Another stock, Lam Research ( LRCX), has been one of the worst performers of the year, said Cramer, but when the company didn't slash estimates, it, too, was able to rally as investors' expectations were expecting the worst.

Compare that to Google ( GOOG), a perpetually rosy company with a history of beating the numbers and raising estimates to boot. Cramer said when Google missed on several key metrics, the stock got pummeled because investors were expecting another blowout and were totally unprepared for bad news.

Other companies suffering the expectation game include Chipotle Mexican Grill ( CMG), VF Corp ( VFC) and Mellanox Technologies ( MLNX). Mellanox got slammed from a high to $120 a share to just $75 a share after the company also set expectations far too high.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Scott Wine, CEO of Polaris Industries ( PII), makers of snowmobiles, off-road vehicles and motorcycles. Polaris delivered a 13-cents-a-share earnings beat on a strong 20% rise in revenue. Shares of Polaris are up 32% since Cramer first featured the company in January.

Wines said that Polaris relies on a strong economy to perform well, which is why he's closely watching the U.S. election for clarity on the "fiscal cliff," rising taxes and above all, increased regulations. He said with major changes in any of those areas Polaris may have difficulty delivering the strong results it has been seeing.

Beyond politics, Wine credited innovation for Polaris' strong results. He said the company spends 4% of revenue on innovation, which has yielded a strong pipeline of new products that customers really enjoy. Wine said whether it's a vehicle for recreation or a utility vehicle for a home, farm or business, Polaris simply has the vehicle to meet customers' needs.

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