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Cramer: These earnings not as they appear

Friday, 25 Oct 2013 | 6:26 PM ET
Eaton CEO: Residential recovery starting to materialize
Friday, 25 Oct 2013 | 6:25 PM ET
Eaton Corporation Chairman & CEO Sandy Cutler discusses the confusing 2013, and "exciting prospects" he has for the company in 2014. Also, Cutler says he is "very proud" of what his team has accomplished around the world this year.

(Click for video linked to a searchable transcript of this Mad Money segment)

If you think this diversified manufacturer just put up a bad report, Cramer says think again.

Of course, Cramer understands your skepticism.

In its most recent release, Eaton said it expects an adjusted full-year profit of between $4.05 and $4.15 per share, down from its previous forecast of $4.05-$4.25 per share.

Analysts had expected $4.18 per share.

Eaton also reported lower-than-expected quarterly revenue, citing weakness in the heavy-duty truck and hydraulic systems markets.

In addition, the company, whose products range from truck transmissions to aircraft fuel systems, said it expects its markets to be flat in 2013, compared with its previous estimate of a 1 percent growth.

All told, developments would seem rather bearish for Eaton – or at least Eaton shareholders.

Cultura | Moodboard | Getty Images

However, Cramer sees results a little differently.

"Look underneath the headlines and you'll see that the quarter was actually far better than what most people expected," Cramer noted. "For example the company posted 3% organic growth and a 7% increase in bookings."

"Plus, on the conference call management raised its end market forecast from flat this year to up 3 to 4 percent in 2014," he said.

It's those kinds of results that Cramer believes will matter going forward.

Also, Cramer thinks a recent acquisition is about to pay off in spades.

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"About a year ago Eaton acquired Cooper Industries for $13 billion, and now that deal is really starting to generate synergies," Cramer said.

It's catalysts such as these, that lead Cramer to conclude that the path of least resistance remains higher.

The stock has gained 30% ytd, Cramer said. Yet, the global economy is showing signs of incremental improvement and that should bode well for Eaton.

*Disclosure: On Friday October 25, 2013 Cramer owned shares of Eaton on behalf of his charitable trust.

Call Cramer: 1-800-743-CNBC

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