Three Charts.

Today I'm showing three charts that Bespoke Investment Group published over on their public website last week.  The first two show one of the things that's bugging the markets right now.  That is that companies are missing on a much higher basis top line growth {rising revenues} but are still able to "beat" earnings estimates on a consistent basis.  That means companies are making estimates more and more by things like cutting expenses, lower tax rates etc.  Investors generally are less than enthused by this process.  Investors in general like growth as it indicates a more healthy company and a more healthy corporate environment.   

Some of this stagnation in revenues has to reflect a less than robust world overseas these days but some of this has to be coming from home as well.  Anyway here's the first two charts:

Percentage of companies beating earnings estimates.  Remember the reporting season isn't over yet.  

Here's Bespoke's take on this.

"Unfortunately, top-line revenue numbers haven't been pretty.  As shown below, 43.9% of the companies that have reported have beaten revenue estimates, which would be the weakest reading seen since the financial crisis.  Last earnings season, we saw a big bounce in revenue beats after two very weak quarters, but it looks now like we're reverting back to what we saw in the middle of 2012."

So what may still be supporting stocks?  One of the things might be dividend yields.  Again from Bespoke:

"....As of.... (4/17), there are 278 stocks in the S&P 500 (55.6% of the index) that currently yield more than the 10-year US Treasury.  Additionally, more than a quarter of all stocks in the index (132) yield more than the 30-year US Treasury.  

While the large percentage of stocks yielding more than US Treasuries is more a result of historically low interest rates than historically high dividend yields, it is hard to argue that the market is overvalued when earnings multiples are merely inline with historical averages while the 'coupon' is greater than the payout on Treasuries."

Dividends may be currently doing some of the heavy lifting for stocks but it's hard to believe that equities won't continue to struggle if more evidence accumulates that the economy is struggling a bit more than expected.  The pattern of a soft economic patch in the April-early fall period seems to be continuing.

Links: 

 Bespokeinvest.com: Percent of S&P 500 Stocks Yielding More Than the 10 Year Treasury.

Bespokeinvest.com: Bottom Line Average, Top Line Bad

*Long ETFs related to the S&P 500 in client and personal accounts.

By the way Bespoke puts out some of the best investment statistics on the Internet in my opinion.  You should definitely go here sometime and check out what they write.  I am a subscriber to their premium content {all of what you see here is free on the web}.  If you are interested in market information they are a "must have" subscription in my opinion.  This is my shout out to them.  They don't know me, don't know that I'm recommending their services and I'm not compensated in any manner to give them a thumbs up.