Accenture PLC (ACN) Soars to 52-Week High, Time to Cash Out?
Shares of Accenture (ACN) have been strong performers lately, with the stock up 7.1% over the past month. The stock hit a new 52-week high of $343.25 in the previous session. Accenture has gained 28.6% since the start of the year compared to the 19.1% move for the Zacks Business Services sector and the 31.2% return for the Zacks Consulting Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 28, 2023, Accenture reported EPS of $2.71 versus consensus estimate of $2.62 while it missed the consensus revenue estimate by 0.52%.
For the current fiscal year, Accenture is expected to post earnings of $12.20 per share on $66.58 billion in revenues. This represents a 4.63% change in EPS on a 3.86% change in revenues. For the next fiscal year, the company is expected to earn $13.15 per share on $70.81 billion in revenues. This represents a year-over-year change of 7.76% and 6.35%, respectively.
Valuation Metrics
Accenture may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Accenture has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 28.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.3X. On a trailing cash flow basis, the stock currently trades at 21.9X versus its peer group's average of 19.3X. Additionally, the stock has a PEG ratio of 3.16. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Accenture currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Accenture fits the bill. Thus, it seems as though Accenture shares could still be poised for more gains ahead.
How Does ACN Stack Up to the Competition?
Shares of ACN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Stantec Inc. (STN). STN has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Stantec Inc. beat our consensus estimate by 18.06%, and for the current fiscal year, STN is expected to post earnings of $3.12 per share on revenue of $3.65 billion.
Shares of Stantec Inc. have gained 7.5% over the past month, and currently trade at a forward P/E of 28.06X and a P/CF of 17.74X.
The Consulting Services industry is in the top 17% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ACN and STN, even beyond their own solid fundamental situation.
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Accenture PLC (ACN) : Free Stock Analysis Report
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