Now that it's corporate earnings season, I thought it would be useful to go over some important points to consider when evaluating a company's latest quarterly results:

1) Remember that revenue growth is often as or even more important than earnings growth. Indeed, companies can boost earnings in the short run by cutting costs. But long-term earnings growth requires higher revenues. Check revenue growth carefully. 2) Make sure earnings growth is not being unduly influenced by large one-time gains. Many companies have been boosting profitability via investment gains. While this is not necessarily a bad thing, these one-time gains may distort the true underlying health of the company. Focus on a company's operating profit. 3) Look at the trend in profit margins. Many companies have been buying growth lately via acquisitions. However, these acquisitions may not always bring on board high-margin business. Compare the operating profit margin (operating profit divided by sales) carefully. 4) Focus on trends. Trends are usually more important than absolute numbers. Are revenues and earnings growing at an accelerating rate over the last three quarters? Are profit margins widening or narrowing? Wall Street reacts to trends, so you need to evaluate numbers in terms of trends from quarter to quarter. 5) Break down a company's individual units for internal health. What you don't want to see, for example, is a company posting declining revenues in four of five businesses but getting bailed out by strength in that one business. You want to see broad-based strength. 6) Look at sequential results. Quarterly earnings compare results for that quarter versus results in the same year-earlier period. I also like to look at trends from quarter to quarter. For example, how do second-quarter results compare to the company's first-quarter results. Is sales momentum beginning to slow? Are profit margins narrowing? 7) Look at important drivers of the long-term health of the company. For example, you don't necessarily want to see a drug company posting slightly higher profits because it has cut back dramatically on research and development spending. 8) Evaluate the earnings in light of the stock's reaction to the earnings announcement. How a stock reacts to earnings says a lot about the "real" expectations about the quarter. Indeed, while a company may beat the "stated" analysts' estimates, if the stock falls on the earnings news, it may be an indication that analysts had been expecting even bigger and better things.