U.S. markets closed

Accenture (ACN) Banks on Service Strength Amid High Talent Cost

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Accenture plc ACN shares have gained 43.7% over the past year, significantly outperforming the 30.4% rise of the Zacks S&P 500 composite.

The company recently reported fourth-quarter fiscal 2021 earnings of $2.20 per share that beat the Zacks Consensus Estimate by 0.5% and improved 29.4% year over year. Revenues of $13.4 billion missed the consensus mark by 0.4% but increased 24% year over year.

Let’s check out how Accenture is currently performing:

Consulting and Outsourcing Strength

Accenture has been steadily gaining traction in its consulting as well as outsourcing 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, and for assistance in the adoption of new technologies. Consulting revenues of $7.3 billion increased 29% year over year in the fourth quarter of fiscal 2021.

On the outsourcing front, Accenture continues to see strong demand for its assistance of clients with the operation and maintenance of digital-related services and cloud enablement. Outsourcing revenues of $6.1 billion surged 19% year over year in the fourth quarter of fiscal 2021.

Accenture PLC Price and Consensus

Accenture PLC Price and Consensus
Accenture PLC Price and Consensus

Accenture PLC price-consensus-chart | Accenture PLC Quote

Cloud Capabilities

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 Gartner that reveals that the worldwide end-user spending on public cloud services is likely to grow 23.1% in 2021 to $332.3 billion, up from $270 billion in 2020. Therefore, considering the growing need for cloud-based applications and software, we expect Accenture’s investments in this space to propel long-term growth.

Talent Cost and Integration Risks

Higher talent costs due to a competitive talent market are hurting consulting services providers like Accenture. The industry is labor intensive and heavily dependent on foreign talent. While continuously acquiring companies improves revenue opportunities, business mix and profitability, it also adds to integration risks. Frequent acquisitions are a distraction for the management, which could impact organic growth.

Zacks Rank and Stocks to Consider

Accenture currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup Inc. MAN, Cross Country Healthcare, Inc. CCRN and Genpact Limited G, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Cross Country Healthcare and Genpact is pegged at 24.2%, 9.9% and 14.7%, respectively.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ManpowerGroup Inc. (MAN) : Free Stock Analysis Report

Accenture PLC (ACN) : Free Stock Analysis Report

Genpact Limited (G) : Free Stock Analysis Report

Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report

To read this article on Zacks.com click here.