Back to top

Image: Bigstock

Here's Why Investors Should Retain Accenture (ACN) Stock Now

Read MoreHide Full Article

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 10.2% growth in fiscal 2021 and 9.5% in fiscal 2022.

The company’s shares have gained 21.2% in the past year compared with 20.8% rally of the industry it belongs to.

Aiding Factors

Accenture's cash and cash equivalent balance of $8.67 billion at the end of first-quarter fiscal 2021 was well above the long-term debt level of $60 million. This indicates that the company has enough cash to meet its debt burden. A strong cash position enables the company to pursue strategic acquisitions, invest in growth initiatives as well as return cash through regular quarterly dividend payouts and share repurchases.

Acquisitions have been one of the key growth strategies for Accenture, enabling it to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. Recently, the company announced acquisition of cloud-native product and platform engineering firm Imaginea. Through this buyout, Accenture Cloud First will be in a position to leverage Imaginea’s cloud-native and product engineering skills to enhance its global capabilities that enable clients across any industry transform to cloud-first businesses. Another acquisition, Businet System will help the company improve its ecommerce capabilities.

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 first-quarter fiscal 2021, Accenture’s outsourcing revenues increased 9% year over year.

Risks Associated

Higher talent costs stemming from a competitive talent market and 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 The Interpublic Group of Companies, Inc. (IPG - Free Report) , Gartner, Inc. (IT - 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 The Interpublic Group of Companies, Gartner and NV5 Global is pegged at 2.4%, 13.5% and 18%, respectively.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot stocks we're targeting >>