Accenture plc ACN shares have gained 7% in the past three months, outperforming 1.1% growth of the industry it belongs to and the 2.4% rise of the S&P 500 composite.
Accenturehas an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
Accenture PLC Price
Accenture PLC price | Accenture PLC Quote
The company has an expected long-term earnings per share (three to five years) growth rate of 7.5%. Earnings are expected to increase 2.4% year over year in fiscal 2024 and 5.3% in fiscal 2025.
Factors That Bode Well
Accenture’s growth strategy focuses on delivering 360° value to its stakeholders, mainly through the use of technology. The company focuses on long-term growth by building a digital core with the help of cloud, data, AI, technology evolution and investment in talent. We believe this strategy positions Accenture as a trusted partner for its clients.
The company continues to witness strong demand for application modernization and maintenance, cloud enablement and cybersecurity-as-a-service. These trends are boosting Accenture’s managed services business across the world. Managed services revenues increased 2% year over year in the third quarter of fiscal 2024 and 11% in fiscal 2023. We expect these revenues to grow 4.5% and 4.8%, respectively, in fiscal 2024 and 2025.
Accenture has a disciplined acquisition strategy focused on channeling its business in high-growth areas, adding skills and capabilities and deepening industry and functional expertise. The company spent $2.5 billion across 25 acquisitions in fiscal 2023.
Commitment to shareholder returns makes Accenture a reliable bet for investors to compound wealth over the long term. In fiscal 2023, 2022, and 2021, the company paid $2.8 billion, $2.5 billion and $2.2 billion in dividends, respectively. We are expecting steady growth in income, which will translate to steady cash flow, enabling it to pay out stable dividends. Per our estimates, the company’s net income will grow 5.2% and 5.8%, respectively, in fiscal 2024 and 2025.
Some 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. Moreover, while advancements 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 Stocks to Consider
ACN currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks are Charles River Associates CRAI and Docusign DOCU.
CRAI carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Charles River Associates has a long-term earnings growth expectation of 16%. The company has an encouraging track record for earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters and missing once. The average beat is 23.5%. Shares of CRAI have risen 53.7% in the past year.
Docusign currently has a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 7.3%.
The company delivered an earnings surprise of 15.7%, on average, surpassing the Zacks Consensus Estimate in each of the trailing four quarters. Shares of DocuSign have risen 18.6% in the past year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
