Back to top

Accenture (ACN) Looks Bright After Earnings: Time To Buy?

Read MoreHide Full Article

A successful investorunderstands the importance of adding well-performing stocks to the portfolio at the right time. Indicators of a stock’s bullish run include a rise in share price and strong fundamentals.

Accenture plc (ACN - Free Report) is one such technology stock that has been on a healthy growth trajectory, of late. It has rallied 15.3% year to date, outperforming 13.9% growth recorded by the industry it belongs to.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick at the moment.

The company’s estimate revision trend for the current year has also been positive. In the past 30 days, 11 estimates have gone upward for Accenture. The Zacks Consensus Estimate moved up to $6.54 per share from $6.42 per share.

Let’s delve deeper into the factors that make this stock an attractive investment option.

Good Projections

For fourth-quarter fiscal 2017, Accenture posted non-GAAP earnings of $1.48 per share, which came ahead of the Zacks Consensus Estimate by a penny. Moreover, earnings increased from $1.31 per share reported in the year-ago quarter.

Accenture’s net revenuesalso increased 7.8% year over year to $9.149 billion and surpassed the Zacks Consensus Estimate of $9.007 billion. Net revenuesalso surpassed the guided range of $8.85 billion and $9.10 billion.

Investors are also buoyedby improved guidance for the first quarter and fiscal 2018.

For first-quarter fiscal 2018, the company projected net revenuesbetween $9.10 billion and $9.35 billion (mid-point $9.225 billion). The Zacks Consensus Estimate is pegged at $9.04 billion.

For fiscal 2018, the company expects net revenue to grow in the range of 5-8% in local currency. Earnings per share on GAAP basis for fiscal 2018 are projected in the range of $6.36-$6.60. The Zacks Consensus Estimate is pegged at $5.90.

Additionally, the company’s strong cash balance position bolsters our confidence in the stock.

Solid Style Score:Accenture currently carriesa VGM Style Score of A. Our research shows that stocks with a VGM Style Scores of A or B combined with a Zacks Rank #1(Strong Buy)or #2, offer the best investment opportunities in growth investing space. These are fundamentally strong businesses aiming at making money for investors in the long run. Consequently, the company appears to be a compelling investment proposition.

Positive Earnings Surprise History: Accenturehas an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 2.6%. The company also has a long-term expected EPS growth rate of 10.3%.

Other Growth Drivers: The company’s long-term prospects look promising, driven by sustained focus on innovative product roll outs, consistent investments in enhancing digital and marketing capabilities, along with major acquisitions. Additionally, we believe regular acquisitions will significantly contribute to the revenue stream.

Other Key Picks

Other top-ranked stocks in the broader technology space are Applied Materials, Inc. (AMAT - Free Report) , Micron Technology, Inc. (MU - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each sportinga Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rates for Applied Materials, Micron and Oracle are 17.1%, 10% and 10.3%, respectively.

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>>



More from Zacks Analyst Blog

You May Like