Accenture plc, ( ACN Quick Quote 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.
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. (and IPG Quick Quote IPG - Free Report) , Gartner, Inc. ( IT Quick Quote IT - Free Report) NV5 Global (, each carrying a Zacks Rank #2 (Buy). You can see NVEE Quick Quote NVEE - Free Report) 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.
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