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5 Reasons to Add Accenture (ACN) Stock to Your Portfolio

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Accenture plc (ACN - Free Report) has performed extremely well so far this year. The stock appreciated 52.3%, significantly outperforming the 40.7% rally of the industry it belongs to.

So, if you haven’t taken advantage of this share price appreciation yet, we believe it’s time you add this financial transaction services stock to your portfolio as it has the potential to sustain the momentum in the near term.

Here are some of the factors that make it an attractive pick.

Solid Rank: Accenture currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer attractive investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: 10 estimates for fiscal 2020 moved north in the past 60 days versus no downward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2019 inched up 0.5%.

Positive Earnings Surprise History: Accenture has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 4.8%.

Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2020 earnings is currently pegged at $7.82, indicating year-over-year growth of 6.3%. Moreover, earnings are expected to register 9.4% growth in fiscal 2021. The stock has long-term expected earnings per share growth rate of 10.3%.

Growth Drivers: Accenture has been steadily gaining traction in its outsourcing as well as consulting businesses backed by high demand for services that can improve operating efficiencies and save costs.

On the consulting front, the company experiences strong demand for digital, cloud- and security-related services. On the outsourcing front, it continues to see strong demand to assist clients with the operation and maintenance of digital-related services and cloud enablement. In the first quarter of fiscal 2020, Accenture’s consulting as well as outsourcing revenues increased 7% year over year.

Accenture PLC Revenue (TTM)

Acquisitions have been one of the key growth strategies for Accenture. They have enabled the company to enter new markets, diversify and broaden its product portfolio, and maintain its leading position.

Accenture’s strategy of enhancing its cloud capabilities through acquisitions and partnerships is a step in the right direction. This is evident from the recent forecast by several independent research firms. According to Gartner, the worldwide public cloud revenues are likely to grow 17% in 2020 to $266.4 billion, up from $227.8 billion in 2019. Per International Data Corporation (IDC), global spending on public cloud services and infrastructure market will witness a compounded annual growth rate (CAGR) of 22.3% during the 2019-2023 period.

Therefore, considering the growing need for cloud-based applications and software, we expect Accenture’s investments in this space to propel long-term growth.

Other Stocks to Consider

Some other top-ranked stocks in the broader Zacks Business Services sector are Cardtronics , Global Payments (GPN - Free Report) and Mastercard Inc. (MA - Free Report) . While Cardtronics sports a Zacks Rank #1, Global Payments and Mastercard carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Cardtronics, Global Payments and Mastercard is 4%, 18% and 16%, respectively.

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