4 Stocks To Watch This Week – December 21, 2015

(Photo Credit: Rodrigo Lübbert)

It’s a light week with the holiday season approaching, but these four S&P 500 names are still reporting their latest quarterly results!

Paychex Inc. (PAYX)

Information Technology – IT Services | Reports December 22, before the open

Similar to last quarter, we head into Paychex’s report with both Estimize and Wall Street expecting EPS of $0.51. Revenues estimates from the Estimize community are only slightly higher at $726.2M as compared to the Street’s $724.2M.

What to watch: Paychex is a provider of payroll and human resource solutions and is often seen as a proxy for the health of small and mid-sized businesses as those are their biggest customers. Small businesses make up 95% of all US businesses, and the road back from the great recession has been rough, with growth trends still slow but gradually improving. A stronger labor market has no doubt helped the company as has their move into cloud-based solutions. The success of their services that help clients understand the Patient Protection and Affordable Care Act should also give a boost to quarterly earnings. However, massive competition still remains from smaller, cloud-based applications such as those offered by Trinet and Zenefits. Another headwind could be interest rates which are now above zero for the first time since 2008. The impact rate tightening has on small businesses could negatively affect Paychex’s sales.

ConAgra Foods (CAG)

Consumer Staples – Food Products | Reports December 22, before the open

The Estimize consensus calls for EPS of $0.59, in-line with Wall Street. However, the Estimize community is expecting slightly higher revenues of $3.42B as compared to the Street’s $3.39B.

What to watch: Earlier in the year ConAgra faced issues with their product mix and as a result has been taking actions to streamline their portfolio of offerings, especially as products such as cereals and snacks have begun to wane in popularity. Like many of their competitors, ConAgra is introducing new products, typically in the natural and organic food categories in order to keep up with customer demand for healthier options.The food products company has also been focused on reducing expenses and diversifying their mix of prices to drive profits. General Mills has been undertaking similar cost cutting endeavors, including a large workforce reduction, but the benefits of those efforts haven’t been seen yet as the company missed estimates both on the top and bottom-line when they reported last week. ConAgra’s stock has done markedly better than General Mill’s in 2015, up 12% YTD as compared to 5% for GIS.