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Here's Why You Should Hold Accenture (ACN) in Your Portfolio

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Accenture plc, (ACN - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth.

The company has an expected long-term earnings per share (three to five years) growth rate of 10%. Further, earnings are anticipated to register 3.7% growth in fiscal 2020 and 6.5% in fiscal 2021.

The company’s shares have gained 23.2% in the past year compared with 18.4% rally of the industry it belongs to.

Aiding Factors

Accenture is steadily gaining traction in its outsourcing businesses, backed by strong demand to assist clients with the operation and maintenance of digital-related services as well as cloud enablement. In the third quarter of fiscal 2020, Accenture’s outsourcing revenues increased 3% year over year.

The recent acquisition of CreativeDrive is expected to boost Accenture’s content, digital-marketing, media and commercial-service offerings. Another recent buyout, Organize Cloud Lab, has helped expand the company’s user-experience consultancy services and ServiceNow solutions.

Moreover, Accenture extended its technology-services agreement with the global mining company Anglo American. The move confirms that Accenture will continue as a strategic IT-services provider to Anglo American till 2023.

Risks Associated

Higher talent costs due to a competitive talent market and Trump’s stringent policies on immigration are hurting consulting-service providers like Accenture. The industry is labor-intensive and heavily dependent on foreign talent.

Zacks Rank and Key Picks

Accenture currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Republic Services (RSG - Free Report) , IQVIA Holdings (IQV - Free Report) and NV5 Global (NVEE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Republic Services, IQVIA Holdings and NV5 Global 7.9%, 9.9% and 13.7%, respectively.

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