Top Three Things Investors Need To Watch In A Company's Earnings Report [VIDEO]

Jonathan Corpina, senior managing partner with the brokerage firm Meridian Equity Partners Inc., weighs in on the quarterly earnings of General Motors Company (NYSE:GM), Apple Inc. (NASDAQ:AAPL) and Caterpillar Inc. (NYSE:CAT) and the top three things investors need to watch in a company's earnings report. Earnings so far this week have shown companies struggling with slowing growth and demand in China and Europe.

Apple shares rallied Wednesday after the tech giant reported better-than-expected earnings after the bell on Tuesday. Apple reported iPhone sales jumped 31.2 percent for the quarter, but the company saw a slowdown in Asia as sales in China fell nearly 19 percent from the previous quarter.

Caterpillar on Wednesday cut its outlook for full-year earnings after reporting a 43 percent drop in the second quarter. Chairman and CEO Doug Oberhelman attributed part of the company’s slowdown in the last few years to China.

General Motors Thursday reported second-quarter earnings that beat Wall Street estimates as the auto giant cut its losses in Europe. The company earned $1.2 billion, or 75 cents a share, in the quarter, down from the $1.5 billion it earned a year earlier. Although GM shaved prior-year losses in Europe by 72 percent, earnings in China and Asia plunged 64 percent to $228 million.

With second-quarter earnings season under way, what do investors need to analyze in quarterly reports in order to see how companies are performing?

"One thing that I like to look at and that stands out to me is cash on hand," said Corpina. “We're always focusing on cash on hand, cash in the books and what do they do with that.”

Corpina explained that companies have substantial balances that they are holding on to, and shareholders want to do something with that money. “One is buy stock back, and that's going to help investor confidence. Two is invest in your own infrastructure -- invest in your people, invest in your product, invest in your company. And three is going to be buy other companies: mergers and acquisitions.”

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