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Why Should You Retain Accenture (ACN) in Your Portfolio?

Zacks Equity Research
·3 mins read

Accenture plc, ACN has an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth.

The company has an expected long-term earnings per share (three to five years) growth rate of 10%. Further, earnings are anticipated to register 3.7% growth in fiscal 2020 and 5.8% in fiscal 2021.

The company’s shares have gained 18% over the past year, outperforming the 16.3% rally of the Zacks S&P 500 composite.

Factors Supporting the Rally

Accenture has been steadily gaining traction in its outsourcing businesses, backed by strong demand to assist clients with the operation and maintenance of digital-related services and cloud enablement. In the third quarter of fiscal 2020, Accenture’s outsourcing revenues increased 3% year over year.

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. The recent acquisition of CreativeDrive is expected to boost Accenture’s content, digital-marketing, media and commercial-service offerings. Another recent buyout, Organize Cloud Lab, has helped expand the company’s user-experience consultancy services and ServiceNow solutions.

Some Hurdles to Counter

Higher talent costs due to a competitive talent market and Trump’s stringent policies on immigration are hurting consulting-service providers like Accenture. The industry is labor-intensive and heavily dependent on foreign talent. Moreover, while advancement in automation and AI offer massive opportunities to the industry, these technologies enable clients to comprehend and integrate new methods to improve performance, thereby creating uncertainty for consulting-services firms.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader Zacks Business Services sector are Republic Services RSG, IQVIA Holdings IQV and NV5 Global NVEE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Republic Services, IQVIA Holdings and CoreLogic is 6.6%, 9.9% and 12%, respectively.

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Republic Services, Inc. (RSG) : Free Stock Analysis Report
 
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