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Here's Why You Should Hold on to Accenture (ACN) Stock Now
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A successful portfolio manager understands the importance of adding well-performing stocks at the right time. Indicators of a stock’s bullish run include a rise in its share price and strong fundamentals.
One such stock that investors need to hold on to right now is Accenture plc (ACN - Free Report) . There are a few lingering concerns which are short-lived. So, the stock has the potential to perform well in the long run.
The stock returned approximately 4.43% in the past six months, marginally outperforming the Zacks categorized Consulting industry’s gain of just 4.42%.
Let’s look at the reasons behind Stratasys’ solid momentum.
Strong Q3 Earnings
The benefit from improved pricing is well reflected in the company’s better-than-expected last-quarterly results. In the company’s third-quarter fiscal 2017 results, revenues not only increased 5.1% year over year to $8.867 billion but also surpassed the Zacks Consensus Estimate of $8.815 billion. The year-over-year increase was aided by a 4% increase in Consulting revenues ($4.82 billion). Outsourcing revenues were up 6% on a year-over-year basis ($4.05 billion).
Accenture posted non-GAAP earnings of $1.52 per share, which was a couple of cents ahead of the Zacks Consensus Estimate. The non-GAAP figure includes a settlement charge of 47 cents per share related to the termination of its U.S. pension plan. Moreover, earnings increased from $1.41 per share on a year-over-year basis.
An encouraging top- and bottom-line performance, which is higher than the respective Zacks Consensus Estimate, helped in boosting investors’ confidence in the company’s prospects.
Further, Accenture provided encouraging revenue guidance for the fourth-quarter. For fourth-quarter fiscal 2017, Accenture expects net revenue between $8.85 billion and $9.10 billion (mid-point $8.975 billion). The Zacks Consensus Estimate is pegged at $8.97 billion.
The company has revised its earnings guidance range for the fiscal 2017 due to a settlement charge of 47 cents related to the termination of its U.S. pension plan. Earnings per share on GAAP basis are now projected in the range of $5.37–$5.44. On non-GAAP basis, it anticipates earnings in the range of $5.84–-$5.91. The Zacks Consensus Estimate is pegged at $5.87.
Estimate Revisions
For fiscal 2017, 7 out of 15 estimates over the last 30 days went upwards. The Zacks Consensus Estimate for fiscal 2017 went up by 1 cent to $5.87 per share over the same time frame.
Other Factors Driving the Stock
Recently, Accenture teamed up with Microsoft Corporation (MSFT - Free Report) to create digital ID databases for more than 1.1 billion people globally, by using the blockchain technology.
Per MarketsandMarkets, the blockchain market size is estimated to grow from $210.2 million in 2016 to $2,312.5 million by 2021 at a compound annual growth rate (CAGR) of 61.5%. In the report, 2015 is considered the base year, while the forecast period is 2016–2021. We believe that Accenture is well positioned to tap this opportunity.
Moving ahead with its cloud first strategy, Accenture recently entered into an agreement to acquire Alexandria-based Phase One Consulting, a cloud computing and digital services provider.
Post the completion of the acquisition, Accenture intends to integrate the latter under its Accenture Federal Services subsidiary. We believe that the recent acquisition will not only strengthen the company’s Salesforce capabilities, but will also help it in gaining more and more federal contracts, thereby boosting its top-line performance.
We are encouraged by Accenture’s strategy of growing through acquisitions. These buyouts have enabled the company to foray into newer markets, diversify and broaden its product portfolio and maintain a leading position. We believe that regular acquisitions will significantly contribute to the company's revenues.
Risks Remain
However, 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.
Additionally, increasing competition from peers such as Cognizant Technology Solutions (CTSH - Free Report) and International Business Machines Corporation (IBM - Free Report) , and an uncertain macroeconomic environment may deter its growth to some extent.
Bottom Line
Notably, the company is on a growth trajectory, gathering momentum from its positive earnings surprise history and strong fundamentals. It delivered a positive earnings surprise in all the last four quarters, with an average positive surprise of 2.6%.
Given that the company’s long-term earnings per share growth rate is 10.33% and has a VGM Style Score of “A”, we believe that the stock still has much upside potential. We can essentially filter the negatives and focus on the positives which drive price.
Accenturecarries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the broader technology sector is Applied Optoelectronics, Inc. (AAOI), which sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Optoelectronics has a long-term expected EPS growth rate of 20%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2%, respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
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Here's Why You Should Hold on to Accenture (ACN) Stock Now
A successful portfolio manager understands the importance of adding well-performing stocks at the right time. Indicators of a stock’s bullish run include a rise in its share price and strong fundamentals.
One such stock that investors need to hold on to right now is Accenture plc (ACN - Free Report) . There are a few lingering concerns which are short-lived. So, the stock has the potential to perform well in the long run.
The stock returned approximately 4.43% in the past six months, marginally outperforming the Zacks categorized Consulting industry’s gain of just 4.42%.
Let’s look at the reasons behind Stratasys’ solid momentum.
Strong Q3 Earnings
The benefit from improved pricing is well reflected in the company’s better-than-expected last-quarterly results. In the company’s third-quarter fiscal 2017 results, revenues not only increased 5.1% year over year to $8.867 billion but also surpassed the Zacks Consensus Estimate of $8.815 billion. The year-over-year increase was aided by a 4% increase in Consulting revenues ($4.82 billion). Outsourcing revenues were up 6% on a year-over-year basis ($4.05 billion).
Accenture posted non-GAAP earnings of $1.52 per share, which was a couple of cents ahead of the Zacks Consensus Estimate. The non-GAAP figure includes a settlement charge of 47 cents per share related to the termination of its U.S. pension plan. Moreover, earnings increased from $1.41 per share on a year-over-year basis.
An encouraging top- and bottom-line performance, which is higher than the respective Zacks Consensus Estimate, helped in boosting investors’ confidence in the company’s prospects.
Further, Accenture provided encouraging revenue guidance for the fourth-quarter. For fourth-quarter fiscal 2017, Accenture expects net revenue between $8.85 billion and $9.10 billion (mid-point $8.975 billion). The Zacks Consensus Estimate is pegged at $8.97 billion.
The company has revised its earnings guidance range for the fiscal 2017 due to a settlement charge of 47 cents related to the termination of its U.S. pension plan. Earnings per share on GAAP basis are now projected in the range of $5.37–$5.44. On non-GAAP basis, it anticipates earnings in the range of $5.84–-$5.91. The Zacks Consensus Estimate is pegged at $5.87.
Estimate Revisions
For fiscal 2017, 7 out of 15 estimates over the last 30 days went upwards. The Zacks Consensus Estimate for fiscal 2017 went up by 1 cent to $5.87 per share over the same time frame.
Other Factors Driving the Stock
Recently, Accenture teamed up with Microsoft Corporation (MSFT - Free Report) to create digital ID databases for more than 1.1 billion people globally, by using the blockchain technology.
Per MarketsandMarkets, the blockchain market size is estimated to grow from $210.2 million in 2016 to $2,312.5 million by 2021 at a compound annual growth rate (CAGR) of 61.5%. In the report, 2015 is considered the base year, while the forecast period is 2016–2021. We believe that Accenture is well positioned to tap this opportunity.
Moving ahead with its cloud first strategy, Accenture recently entered into an agreement to acquire Alexandria-based Phase One Consulting, a cloud computing and digital services provider.
Post the completion of the acquisition, Accenture intends to integrate the latter under its Accenture Federal Services subsidiary. We believe that the recent acquisition will not only strengthen the company’s Salesforce capabilities, but will also help it in gaining more and more federal contracts, thereby boosting its top-line performance.
We are encouraged by Accenture’s strategy of growing through acquisitions. These buyouts have enabled the company to foray into newer markets, diversify and broaden its product portfolio and maintain a leading position. We believe that regular acquisitions will significantly contribute to the company's revenues.
Risks Remain
However, 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.
Additionally, increasing competition from peers such as Cognizant Technology Solutions (CTSH - Free Report) and International Business Machines Corporation (IBM - Free Report) , and an uncertain macroeconomic environment may deter its growth to some extent.
Bottom Line
Notably, the company is on a growth trajectory, gathering momentum from its positive earnings surprise history and strong fundamentals. It delivered a positive earnings surprise in all the last four quarters, with an average positive surprise of 2.6%.
Given that the company’s long-term earnings per share growth rate is 10.33% and has a VGM Style Score of “A”, we believe that the stock still has much upside potential. We can essentially filter the negatives and focus on the positives which drive price.
Accenturecarries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the broader technology sector is Applied Optoelectronics, Inc. (AAOI), which sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Optoelectronics has a long-term expected EPS growth rate of 20%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2%, respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>