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Within two months of entering into an agreement, Accenture Plc (ACN - Free Report) completed the acquisition of Seabury Group – a strategy consulting firm – that mainly focuses on the aviation industry, last week.
Founded in 1995, Seabury Group is best known for providing strategic planning and cost-reduction solutions to distressed aviation companies. Through its strategic consulting services, the company helps aviation companies in managing fleet, network, commercial, maintenance, airports and cargo in a more planned and cost effective way. It also helps organizations to make improvements in their human capital.
Through a combination of its industry expertise, analytical techniques, data and proven tools, Seabury has provided services to over 300 clients across 50 countries. A few of its major clients include Azul Airlines, TAP Portugal, Monarch Airlines, and Etihad Airways.
Accenture integrated Seabury Group’s business into the Accenture Aviation Practice division. With this, Seabury’s 120 employees have joined the integrated division.
Rationale Behind Acquisition
By integrating Seabury Group, Accenture has not only got a large talent pool, but has also gained a huge customer base. Therefore, we believe that this acquisition will strengthen Accenture’s presence in the Aviation consulting market as well as help it to gain more market share.
By combining Seabury Group’s corporate advisory and consulting businesses with its global capabilities, Accenture believes that it can help airline companies in making a digital transformation at a much accelerated pace.
Group chief executive of Accenture’s Products operating group, Sander van‘t Noordende said, “With digital transformation forcing the aviation industry to rethink its business and operating models, we expect continued strong demand for consulting services in this industry. This acquisition will enhance our ability to accelerate the pace of transformation our clients need and to deliver the industry-specific strategies that our clients are increasingly seeking to drive competitiveness and differentiation.”
Therefore, we believe that the buyout will expand Accenture’s capabilities in providing end-to-end strategy consulting services to the airline companies. It will also help it to gain more market share, thereby boosting its top-line performance.
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far in 2017, the company has either completed or signed about seven acquisition deals across various business segments. Last year too, Accenture 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 its product portfolio, and maintain the 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 consistent 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 one year. The stock generated a return of 15.7% almost matching the industry’s gain of 16.6%.
Nonetheless, Accenture’s recent announcement of creating 15K new jobs by 2020, and investment plan of $1.4 billion for employee training and opening of 10 innovation centers across the U.S. cities may dent its bottom-line results, in our opinion. The company is believed to be preparing itself for a more protectionist U.S. technology visa program under the newly elected president, Donald Trump.
It should be noted that out of over 394,000 of its total workforce, 140,000 are in India, which provides it a cost advantage. With the addition of 15,000 jobs, Accenture’s total employee count in the U.S. will increase by 30% to 65,000, thereby increasing its salary expenses significantly.
The stock currently carries a Zacks Rank #3 (Hold).
Exponent has witnessed upward estimate revisions for 2017 and 2018 in the last 60 days, and has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters with an average positive surprise of 9.35%.
Estimates for CRA International have also moved up in the last 30 days. It has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters.
Estimates for The Hackett Group have also moved up in the last 30 days.
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Image: Bigstock
Accenture (ACN) Closes Consulting Firm Seabury's Acquisition
Within two months of entering into an agreement, Accenture Plc (ACN - Free Report) completed the acquisition of Seabury Group – a strategy consulting firm – that mainly focuses on the aviation industry, last week.
Founded in 1995, Seabury Group is best known for providing strategic planning and cost-reduction solutions to distressed aviation companies. Through its strategic consulting services, the company helps aviation companies in managing fleet, network, commercial, maintenance, airports and cargo in a more planned and cost effective way. It also helps organizations to make improvements in their human capital.
Through a combination of its industry expertise, analytical techniques, data and proven tools, Seabury has provided services to over 300 clients across 50 countries. A few of its major clients include Azul Airlines, TAP Portugal, Monarch Airlines, and Etihad Airways.
Accenture integrated Seabury Group’s business into the Accenture Aviation Practice division. With this, Seabury’s 120 employees have joined the integrated division.
Rationale Behind Acquisition
By integrating Seabury Group, Accenture has not only got a large talent pool, but has also gained a huge customer base. Therefore, we believe that this acquisition will strengthen Accenture’s presence in the Aviation consulting market as well as help it to gain more market share.
By combining Seabury Group’s corporate advisory and consulting businesses with its global capabilities, Accenture believes that it can help airline companies in making a digital transformation at a much accelerated pace.
Group chief executive of Accenture’s Products operating group, Sander van‘t Noordende said, “With digital transformation forcing the aviation industry to rethink its business and operating models, we expect continued strong demand for consulting services in this industry. This acquisition will enhance our ability to accelerate the pace of transformation our clients need and to deliver the industry-specific strategies that our clients are increasingly seeking to drive competitiveness and differentiation.”
Therefore, we believe that the buyout will expand Accenture’s capabilities in providing end-to-end strategy consulting services to the airline companies. It will also help it to gain more market share, thereby boosting its top-line performance.
Accenture PLC Price
Accenture PLC Price | Accenture PLC Quote
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far in 2017, the company has either completed or signed about seven acquisition deals across various business segments. Last year too, Accenture 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 its product portfolio, and maintain the 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 consistent 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 one year. The stock generated a return of 15.7% almost matching the industry’s gain of 16.6%.
Nonetheless, Accenture’s recent announcement of creating 15K new jobs by 2020, and investment plan of $1.4 billion for employee training and opening of 10 innovation centers across the U.S. cities may dent its bottom-line results, in our opinion. The company is believed to be preparing itself for a more protectionist U.S. technology visa program under the newly elected president, Donald Trump.
It should be noted that out of over 394,000 of its total workforce, 140,000 are in India, which provides it a cost advantage. With the addition of 15,000 jobs, Accenture’s total employee count in the U.S. will increase by 30% to 65,000, thereby increasing its salary expenses significantly.
The stock currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the consulting industry are Exponent Inc. (EXPO - Free Report) , CRA International Inc. (CRAI - Free Report) and The Hackett Group, Inc. (HCKT - Free Report) . Exponent sports a Zacks Rank #1 (Strong Buy), while CRA International and The Hackett Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Exponent has witnessed upward estimate revisions for 2017 and 2018 in the last 60 days, and has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters with an average positive surprise of 9.35%.
Estimates for CRA International have also moved up in the last 30 days. It has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters.
Estimates for The Hackett Group have also moved up in the last 30 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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