Accenture plc (ACN - Free Report) announced on Friday that chairman and CEO Pierre Nanterme has resigned for health reasons. He was diagnosed and had surgery for colon cancer in July 2016.
Nanterme, 59, spent his entire career of 36 years at Accenture and became CEO in 2011. He took up the additional position of chairman of the board in 2013. Accenture has delivered strong financial results and high returns to shareholders under his leadership. Net revenues increased 55% from $25.5 billion in fiscal 2011 to $39.6 billion in fiscal 2018. Its market cap rose to $108 billion from $70 billion under his tenure through Aug 31, 2018 with total return to shareholders being 309%.
“It has been my honor and privilege to serve Accenture’s people and our clients for my entire 36-year career, and I’ve never been more confident in our business strategy, leadership team and people,” said Nanterme.
Accenture's stock slipped slightly on Friday. Over the past year, the stock has declined 5.3% compared with 8.7% decline of the industry.
David Rowland, Accenture's chief financial officer, has been appointed as the interim CEO and board of director. He has been with Accenture for 35 years and has served as chief financial officer since July 2013. KC McClure, who has been head of Accenture’s finance operations, will now serve as chief financial officer. She has been with Accenture for 30 years. Accenture appointed lead independent director Marge Magner as non-executive chair of the board.
These changes do not lead to any revision in the business outlook for the second quarter and fiscal year 2019.
Rowlandis taking up responsibilities at a time when Accenture is financially strong. The company exited first-quarter fiscal 2019 with cash and cash equivalents balance of $4.36 billion. It reported EPS of $1.96 in the quarter that grew 9.5% year over year. Net revenues of $10.6 billion increased 7.3% year over year.
Accenture’s current position underscores Nanterme’s efforts to shift to high-growth areas of digital, cloud and security. These areas currently contribute more than 60% of Accenture’s total revenues. We believe that Rowlandwill continue prioritizing these areas.
Zacks Rank & Stocks to Consider
Accenture currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader Zacks Business Services sector are Republic Services (RSG - Free Report) , Waste Connections (WCN - Free Report) and Navigant Consulting (NCI - 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.
Long-term expected EPS (three to five years) growth rate for Republic Services, Waste Connections and Navigant is 10.7%, 11.7% and 13.5%, respectively.
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