“What is an essential predictor for stock performance? – Earnings of the firm!” is a frequent intuitive answer… the full truth is that the cash-based earnings have a better predictive power according to empirical studies at the University of Chicago Booth School of Business.

Why cash profits are the best predictor of stock performance (by Ray Ball, Joseph Gerakos, Juhani Linnainmaa, and Valeri Nikolaev)