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Accenture Buys Product Design and Innovation Firm, Altitude
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Continuing with its strategy of growing through acquisitions, Accenture Plc (ACN - Free Report) recently announced that it has acquired Altitude, a privately held product design and innovation firm. However, the financial details of the transaction were kept under wraps.
Rationale Behind the Acquisition
Founded in 1992, the Boston-based Altitude is best known for its expertise in consumer insight and product creation through which it help organizations in innovating and developing new physical products and services. Over the last two decades it has helped over 1100 organizations including Anheuser-Busch, DeWalt, ThermoFisher Scientific and Under Armour (UA - Free Report) in creating award-winning products. The company, through its 12 offices across four continents operates in 80 countries.
Accenture intends to combine Altitude’s innovation, design, and engineering expertise with its full range of consulting, technology and digital capabilities including artificial intelligence, cybersecurity and Internet of Things (IoT).
According to Accenture “The combination will enable the creation of an integrated set of connected-product services, better positioning Accenture to help companies rapidly develop IoT business models and capture new revenue streams in the high-growth, connected products and services market.”
Therefore, the latest deal is anticipated to further strengthen Accenture’s ability to help clients design and create physical products. The acquisition of Altitude will not only bring in a huge talent pool, but will also expand its reach in different markets.
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. Last year, the company has either completed or signed about 12 acquisition deals across various business segments, including IT security, CRM capabilities and strategy consulting. In 2015, 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 $4.08 billion and an operating cash flow of $1.08 billion at the end of first-quarter fiscal 2017 are expected to support Accenture’s inorganic growth strategy.
Bottom Line
Accenture’s long-term prospects look promising due to its 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 trading in line with the Zacks categorized Consulting industry, over the past year. The stock generated a return of 15.8% almost matching the industry’s gain of 16%.
A couple of better-ranked stocks in the Consulting Services industry include Gartner Inc. (IT - Free Report) and NV5 Global Inc. (NVEE - Free Report) , both carrying a Zacks Rank #2 (Buy). Gartner and NV5 Global have long-term earnings per share growth rate of 17.3% and 20%, respectively.
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Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Accenture Buys Product Design and Innovation Firm, Altitude
Continuing with its strategy of growing through acquisitions, Accenture Plc (ACN - Free Report) recently announced that it has acquired Altitude, a privately held product design and innovation firm. However, the financial details of the transaction were kept under wraps.
Rationale Behind the Acquisition
Founded in 1992, the Boston-based Altitude is best known for its expertise in consumer insight and product creation through which it help organizations in innovating and developing new physical products and services. Over the last two decades it has helped over 1100 organizations including Anheuser-Busch, DeWalt, ThermoFisher Scientific and Under Armour (UA - Free Report) in creating award-winning products. The company, through its 12 offices across four continents operates in 80 countries.
Accenture intends to combine Altitude’s innovation, design, and engineering expertise with its full range of consulting, technology and digital capabilities including artificial intelligence, cybersecurity and Internet of Things (IoT).
According to Accenture “The combination will enable the creation of an integrated set of connected-product services, better positioning Accenture to help companies rapidly develop IoT business models and capture new revenue streams in the high-growth, connected products and services market.”
Therefore, the latest deal is anticipated to further strengthen Accenture’s ability to help clients design and create physical products. The acquisition of Altitude will not only bring in a huge talent pool, but will also expand its reach in different markets.
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. Last year, the company has either completed or signed about 12 acquisition deals across various business segments, including IT security, CRM capabilities and strategy consulting. In 2015, 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 $4.08 billion and an operating cash flow of $1.08 billion at the end of first-quarter fiscal 2017 are expected to support Accenture’s inorganic growth strategy.
Bottom Line
Accenture’s long-term prospects look promising due to its 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 trading in line with the Zacks categorized Consulting industry, over the past year. The stock generated a return of 15.8% almost matching the industry’s gain of 16%.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
A couple of better-ranked stocks in the Consulting Services industry include Gartner Inc. (IT - Free Report) and NV5 Global Inc. (NVEE - Free Report) , both carrying a Zacks Rank #2 (Buy). Gartner and NV5 Global have long-term earnings per share growth rate of 17.3% and 20%, respectively.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>