In 2000, General Electric posted its 100th consecutive quarter of growth in continuing operations. That's 25 years. Raise your hand if that sounds just a bit suspicious. Whatever business you're in, that feat just isn't possible unless your company's managing its reported earnings.

According to a 1998 survey, 78% of chief financial officers attending a given conference said they'd been asked to "cast financial results in a better light" without running afoul of GAAP. Half said they'd done it. Nearly half said they'd been asked to misrepresent their company's numbers, and 38% admitted they'd done so. Another survey at a different conference found that more than half of the CFOs attending had been asked to juice their numbers, and 17% had agreed to do so.

It's easy to understand why companies succumb to the incredible pressure to make it look like they've met or beaten targets or Wall Street expectations. Consistent growth is a feather in any CEO's cap, and a rising stock price often increases many executives' compensation, especially from stock options. But when companies stray from merely managing their numbers within GAAP into outright fudging them -- Enron, Sunbeam, we're looking at you here -- they can ruin themselves and their shareholders.

How can we spot suspicious earnings patterns soon enough to save ourselves? We can track how closely a company meets earnings expectations, monitor its frequency of year-over-year growth, and compare those stats to numbers from a few competitors, which should be affected similarly by changes in the business cycle. Any company that lands eerily close to earnings-per-share (EPS) expectations, and grows earnings year over year with unusual reliability, should raise a yellow flag and invite us to look closer.

Here's a look at what Home Depot (NYSE: HD), the home supplies retailer, has done over the past few years. I've also included a couple of other businesses playing in the same space for comparison.

Company

Reported EPS Within $0.02 of Estimates?

How Close to Estimates, on Average

How Often It Reported Growth

Home Depot

6 times in last 22 quarters.

$0.03

10 times in last 22 quarters.

Sears Holdings (Nasdaq: SHLD)

2 times in last 26 quarters.

$0.02

13 times in last 26 quarters.

Wal-Mart (NYSE: WMT)

18 times in last 26 quarters.

$0.01

20 times in last 22 quarters.

Source: www.earnings.com and author calculation. Difference in number of quarters counted due to data source.

In my view, there's not much to worry about for either Home Depot or Sears. Barely a handful of times have they hit close to estimates and they have not reported consistent growth. On the other hand, Wal-Mart has come close to estimates better than two-thirds of the time, averages very close -- its biggest differential was just $0.05 -- and has only missed reporting yearly growth in the fourth quarter of 2009 and Q2 2008, of the last 22 quarters. Might be worth a closer look to make sure that it's not doing anything funky.

Note that I'm not concentrating on managing estimates here -- though management does that, too. However, if a management team always seems to deliver on estimates time and time again, you should probably dig a bit deeper, to see whether its interpretation of GAAP is getting a bit too fast and loose.

Investors crave consistency. That's one reason why its string of reliable results spurred GE's stock price to rise so much in the 1980s and 1990s. But the real world isn't consistent, and Foolish investors should account for that. If a company's results seem too steady to be true, Fools should proceed with caution.

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Home Depot and Wal-Mart are Motley Fool Inside Value recommendations. The Fool owns shares of Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

Fool analyst Jim Mueller is a beneficial owner of General Electric, but doesn't have a position in any other company mentioned. He works with the Stock Advisor newsletter service. The Fool is all about investors writing for investors.

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