Accenture plc ACN performed well in the past year and has the potential to sustain the momentum. If you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
Let’s take a look at the factors that make the stock an attractive pick.
An Outperformer: A glimpse at the company’s price trend reveals that its shares have surged 64% in the past year compared with 62% rise of the industry it belongs to.
Solid Rank & VGM Score: Accenture currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Twelve estimates for 2021 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2021 earnings has moved up 3.2% in the past 60 days.
Positive Earnings Surprise History: Accenture has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering an earnings surprise of 3.5%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for 2021 earnings is peeged at $8.48, which reflects year-over-year growth of 13.7 %. Moreover, earnings are expected to register 10.3% growth in 2022. The stock’s long-term expected earnings per share (EPS) growth rate is at 10%.
Driving Factors: Acquisitions have been one of Accenture’s key growth strategies. These have enabled the company to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. In fiscal 2020, the company invested more than $1.5 billion on 34 acquisitions. Recently, the company announced acquisition of fable+. This will likely help Accenture expand its analytics-driven transformation and workplace culture capabilities. The buyout of Cirrus is expected to boost Accenture’s development and coaching capabilities for leaders who look out for business transformation.
Accenture’s cash and cash equivalent balance of $9.17 billion at the end of the second-quarter fiscal 2021 was well above the long-term debt level $59.8 million, underscoring that the company has enough cash to meet its debt burden. A strong cash position enables the company to pursue strategic acquisitions, invest in growth initiatives as well as return cash through regular quarterly dividend payment and share repurchases.
Other Stocks to Consider
Other stocks worth considering in the broader Zacks Business Services sector are S&P Global Inc. SPGI, Gartner, Inc. IT and TeleTech Holdings TTEC. S&P Global and Gartner carry a Zacks Rank #2 (Buy), while TeleTech sports a Zacks #1 Rank.
The long-term expected EPS (three to five years) growth rate for S&P Global, Gartner and TeleTech is pegged at 10%, 13.5% and 14.7%, respectively.
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