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Why You Should Retain Accenture (ACN) in Your Portfolio Now

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A successful portfolio manager is aware of the importance of having well-performing stocks in one’s portfolio. Indicators of a stock’s consistent performance include a rally in share price and robust fundamentals.

One such stock that investors need to hold on to right now is Accenture Plc (ACN - Free Report) . Though there are a few concerns, these are short lived. The stock has the potential to perform well over the long run.

Accenture’s share-price movement has been quite encouraging. In the last one year, its shares have appreciated 34.5%, while the industry to which it belongs to recorded a decline of 30.5%.



What’s Driving Accenture?

Accenture is one of the leading providers of management consultancy, technology and outsourcing services in the world. The company is on a growth trajectory, gathering momentum from its positive earnings surprise history and robust fundamentals. It delivered a positive earnings surprise in three out of the last four quarters, with an average positive surprise of 3%.

Last quarter, Accenture reported sturdy year-over-year improvement in revenues and earnings. The year-over-year upswing was primarily driven by its continued focus on innovative product roll outs, continued investments in enhancing digital and marketing capabilities, along with major acquisitions.

Furthermore, Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. The company closed 37 acquisition deals worth approximately $1.7 billion in fiscal 2017. Also, over the last three fiscals, Accenture has invested approximately $3.4 billion in acquiring nearly 70 companies, including start-ups.

These acquisitions have helped the company enhance its product offerings and penetrate into newer markets, thereby contributing to the company’s top line. We believe its acquisition strategy will have a positive impact on Accenture’s top-line performances in the upcoming quarters.

Apart from acquisitions, Accenture’s strategic partnerships with companies like Google, Microsoft (MSFT - Free Report) , Oracle (ORCL - Free Report) and Salesforce (CRM - Free Report) have also been key catalysts.  Partnerships have always helped the company fortify its presence across segments like IT security, customer-relationship management and consulting, in turn bolstering its revenues. We expect the company to retain this bullish momentum, backed by its continued focus on operational efficiency.

Bottom Line

Given that the company’s long-term earnings per share growth rate is 10% and has a VGM Style Score of A, we believe the stock still has much upside potential. We can essentially filter the negatives and focus on the positives which drive price.

Accenture carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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