Cramer listens to earnings calls; look for mgmt confidence, like J&J

In the midst of earnings season, there are a thousand different ways to evaluate all the new information that's coming at us. In comments on today's MAD MONEY, Jim Cramer said that listening to earnings conference calls was a great way to capture some insight. He pointed out the reaction to Johnson & Johnson (NYSE:JNJ)'s third quarter results. Immediately after the earnings report, the stock wasn't much moved, but then rallied $4.00 after the call. Why? It wasn't what the management said but how they said it.

Cramer's analysis: you can't just trade off the headline from the press releases, it's far more important to listen to the calls and get your guidance there. He said sometimes companies will telegraph that the street estimates are too low,and they often outline why. You have to listen for confidence in management, he explained. If they are solid then that is often good, but it is bad if they are sheepish.

He said investors got an "A+" message from JNJ after the conference call and you have to see how long they take in between a question and their answer. You also have to worry if management appears unorganized or if management is evasive or won't answer. He said if a company gets hit on guidance, you have to figure out if they were just being conservative to avoid liability. You want to see if they underpromise and overdeliver.

He also likes to look for outlying information like new products or new operations that can make analysts go in and recalculate numbers. He said JNJ right at the top got rid of the overhanging gimmicks to stop the bears from being able to question them.

He says JNJ is going to $74.