The best way to evaluate quality is to compare operating cash flow per share (OPS) to reported EPS.

If OPS is greater than reported EPS, earnings are of a high quality because the company is generating more cash than is reported on the income statement.

If OPS is less than reported EPS, it means that the company is generating less cash than is represented by reported EPS. In this case, EPS is of low quality because it does not reflect the negative operating results of the company and overstates the actual (cash) operating results.

StockDiagnostics.com believes the answer lies in a careful examination of earnings per share (EPS) figures in the context of "OPS" (Operational-cashflow Per Share). We have analyzed the Cash Flow Statements and the Income Statements of thousands of U.S. publicly traded companies and have identified a series of conditions that constitute early warning signs of a company's health. We have named these conditions, when combined, "The EPS Syndrome," and have filed patents on their discovery. Additionally, negative "OPS" (Operational-cashflow Per Share) constitutes evidence that a company should be closely monitored. Fundamentally, any cash flow calculations based on earnings must be contrasted with StockDiagnostics.com "OPS" (Operational-cashflow Per Share).