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Accenture (ACN) Enters Into Agreement to Acquire Arismore
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Accenture Plc. (ACN - Free Report) is continuing its strategy to grow through acquisitions. Recently, the global IT services provider inked an agreement to acquire Arismore, a privately held company in France. The company did not disclose the terms of the deal, which will undergo regulatory review and is subject to customary closing conditions.
About Arismore
Founded in 2002, Arismore focuses on providing security and enterprise architecture services for various organizations including telecommunications, media, distribution, energy, transportation, banking and insurance sectors.
Pros of the Acquisition
The latest deal is expected to expand Accenture’s existing identity and access management services and security-as-a-service capabilities. It is also likely to to strengthen its leadership position in France.
Per Accenture’s press release, “Acquiring Arismore would be a significant step forward in our growth strategy and would solidify our position as a leading provider of digital identity management and security services in France.”
The acquisition is part of the company’s efforts to bolster its digital marketing capabilities globally. In our opinion, the deal will further help Accenture in providing end-to-end digital marketing services, which will bring a deeper and broader set of digital solutions to its clients.
Considering the growing need for digital marketing, we expect Accenture’s investment in digital and marketing capabilities to boost long-term growth. It will also help the company in effectively competing with other digital marketing service providers such as International Business Machines Corp. (IBM - Free Report) , Dell and Deloitte.
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far this year, the company has either completed or signed over twelve acquisition deals across various business segments, including IT security, CRM capabilities, strategy consulting, etc. Last year, it had closed 21 takeovers.
These acquisitions have enabled Accenture to foray into newer markets, diversify and broaden the product portfolio, and maintain its leading position. A strong cash balance of $4.91 billion and an operating cash flow of $2.06 billion at the end of fourth-quarter fiscal 2016 are expected to support the company’s inorganic growth strategy.
Our View
Accenture’s long-term prospects look promising due to sustained focus on new and innovative product launches, continuous investments in enhancing digital and marketing capabilities, as well as major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.
Notably, shares of Accenture have been steadily trending higher on a year-to-date basis. The stock generated a return of 18.3%, which outperformed the Zacks Consulting industry’s gain of 15.6%.
However, increasing competition from Cognizant Technology Solutions (CTSH - Free Report) , a strained spending environment and Accenture’s broad European exposure may temper its growth to some extent.
A better-ranked stock in the Technology sector is Marvell Technology Group Ltd. (MRVL - Free Report) , sporting a Zacks Rank #1. The stock has long-term expected earnings per share growth rate of 12.33%
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Accenture (ACN) Enters Into Agreement to Acquire Arismore
Accenture Plc. (ACN - Free Report) is continuing its strategy to grow through acquisitions. Recently, the global IT services provider inked an agreement to acquire Arismore, a privately held company in France. The company did not disclose the terms of the deal, which will undergo regulatory review and is subject to customary closing conditions.
About Arismore
Founded in 2002, Arismore focuses on providing security and enterprise architecture services for various organizations including telecommunications, media, distribution, energy, transportation, banking and insurance sectors.
Pros of the Acquisition
The latest deal is expected to expand Accenture’s existing identity and access management services and security-as-a-service capabilities. It is also likely to to strengthen its leadership position in France.
Per Accenture’s press release, “Acquiring Arismore would be a significant step forward in our growth strategy and would solidify our position as a leading provider of digital identity management and security services in France.”
The acquisition is part of the company’s efforts to bolster its digital marketing capabilities globally. In our opinion, the deal will further help Accenture in providing end-to-end digital marketing services, which will bring a deeper and broader set of digital solutions to its clients.
Considering the growing need for digital marketing, we expect Accenture’s investment in digital and marketing capabilities to boost long-term growth. It will also help the company in effectively competing with other digital marketing service providers such as International Business Machines Corp. (IBM - Free Report) , Dell and Deloitte.
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far this year, the company has either completed or signed over twelve acquisition deals across various business segments, including IT security, CRM capabilities, strategy consulting, etc. Last year, it had closed 21 takeovers.
These acquisitions have enabled Accenture to foray into newer markets, diversify and broaden the product portfolio, and maintain its leading position. A strong cash balance of $4.91 billion and an operating cash flow of $2.06 billion at the end of fourth-quarter fiscal 2016 are expected to support the company’s inorganic growth strategy.
Our View
Accenture’s long-term prospects look promising due to sustained focus on new and innovative product launches, continuous investments in enhancing digital and marketing capabilities, as well as major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.
Notably, shares of Accenture have been steadily trending higher on a year-to-date basis. The stock generated a return of 18.3%, which outperformed the Zacks Consulting industry’s gain of 15.6%.
However, increasing competition from Cognizant Technology Solutions (CTSH - Free Report) , a strained spending environment and Accenture’s broad European exposure may temper its growth to some extent.
Currently, Accenture has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the Technology sector is Marvell Technology Group Ltd. (MRVL - Free Report) , sporting a Zacks Rank #1. The stock has long-term expected earnings per share growth rate of 12.33%
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>