See how this grabs you for an earnings result: Packaging company Sonoco (NYSE:SON) reported yesterday that its fourth-quarter 2004 profits fell 53% on a 21% increase in sales over Q4 2003. The stock is up nearly 2% as of this writing.

There's something that'll make you go "hmm."

But it shouldn't, really. Not if you, unlike so many investors, can train yourself to read beyond the headlines and search among the picky little details of company press releases. For therein lies the answer to the riddle of Sonoco's strange price movement: The "decline" in profits wasn't really a decline at all.

Last year, you see, Sonoco benefited from a most extraordinary gain in racking up its stellar $0.75 per share in fourth-quarter net earnings. More than two-thirds of those profits came in the form of a one-time event -- the sale of the company's high-density film business, which yielded a $0.51-per-share gain. Net that out, and this quarter's $0.35 net earnings would have equated to a 46% increase in profits rather than the 53% decrease it looks like under generally accepted accounting principles.

On the other hand, figure in the year-ago quarter's one-time restructuring charge of $0.13, and we're back to a year-on-year decline, from $0.37 down to $0.35. Ain't math fun?

After examining Sonoco's earnings report from all three of these angles, Wall Street appears to have concluded that it was, on the whole, acceptable. Not stellar, but not nearly as lousy as the GAAP numbers make it look.

But looking at three angles hardly seems sufficient, does it? So let's take a gander at free cash flow. There we see some bad news. FCF in the year-ago quarter totaled $94 million; this quarter, an increase in working capital requirements and a ramp-up in inventory associated with getting the company's new operations on line in Brazil, California, and Wisconsin, knocked that number down to $80 million. The story was similar for 2004 as a whole. In 2003, Sonoco posted FCF of $218 million. This year, that number dropped to $131 million.

The good news is that that $131 million still suffices to finance Sonoco's hefty 3.4% dividend -- a primary factor in motivating income-loving Fool Mathew Emmert to recommend the company in the Motley Fool Income Investor last May. Even after paying the dividend, Sonoco had $46 million left over. That's cash that it can use to continue expanding its business, buy back stock, increase the already strong dividend, or -- as this Fool would prefer to see, and as the company committed itself to doing in its earnings release -- continue paying down its $800 million worth of long-term debt.

Since being recommended in May 2004, Sonoco has yielded 13% total returns to its owners, versus a 10% rise in the S&P 500. Think that's not much? Well, $1,000 invested today will double to $2,000 in about 7.5 years at 10%. Ratchet that rate of appreciation up to 13%, and you can double your money in just six years. That's the magic of compounding. Learn more about it, and get all 36 Income Investor recommendations free for one month, just byclicking here.

Fool contributor Rich Smith has no position in Sonoco.