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Cramer bites into Apple: Wall Street still ignoring the most important part of earnings

Nitpickers were out in full force after Apple reported earnings on Tuesday, which left Jim Cramer perplexed as to why Wall Street is ignoring the company's service revenue stream.

"To me, once again, the exceedingly profitable revenue stream is the one to watch, and it is still being relatively ignored, despite its 24 percent growth to $6.3 billion, and despite the naysayers' comments," the "Mad Money" host said.

After reviewing the quarter, Cramer gave his usual mantra to own Apple, don't trade it. Apple's stock jumped far in advance of earnings, partially because of Samsung's issue with the Galaxy Note 7 phone that left room for Apple to take share in the industry.

While Apple's revenue came in line with estimates and earnings beat analyst expectations with better than expected iPhone sales, it was the third straight quarter with a year-over-year decline in revenue.

Last year, comparable sales were $51.5 billion, versus $46.9 billion this quarter. Shares fell more than 2 percent in after-hours trading in response.





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Apple iPhone 7
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Outside of Apple and Samsung, Cramer saw many more examples of companies excelling versus the competition because they are doing so well with the hand they have been dealt.

Procter and Gamble became a house of brands that at one point seemed stalled to Cramer. Some investors considered the stock nothing more than a bond market equivalent with a 3 percent yield.

That all changed on Tuesday when Procter & Gamble blew away the numbers, posting 3 percent organic growth. Cramer considered that impressive considering the size of the company.

United Technologies boosted its earnings guidance after reporting a terrific quarter. Yet, in contrast, General Electric brought its forecast down.

"I think a case can be made that United Technologies is simply out-executing GE in more than just aerospace," Cramer said.

It all came down to execution for Cramer, especially in a busy earnings season that is notorious for turmoil. For those investors who do their own stock picking, Cramer reminded them to remember the effect of strong management, and to avoid battleground stocks, like Under Armour in the sports apparel space.

"At least until the smoke clears and the stocks have fallen so far that I will tell you when the time is right to pounce," Cramer said.

Correction: This story has been updated to show that Apple reported revenue of $46.9 billion.


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