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Here's Why You Should Hold on to Accenture (ACN) Stock For Now

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·3-min read
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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 the quality and sustainability of its growth.

The company has an expected long-term earnings per share (three to five years) growth rate of 10%. Earnings are expected to increase 22.6% year over year in fiscal 2022 and 10.9% in fiscal 2023.

Facrors That Bode Well?

Acquisitions have been one of Accenture’s key growth strategies. These have enabled the company to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. The recent acquisition of Brussels-based Greenfish is expected to help Accenture enhance its sustainability skills and services to better address the increasing needs of clients, especially across Europe.

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 adoption of new technologies. Consulting revenues of $9 billion increased 24% year over year in the third quarter of fiscal 2022.

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 $7.1 billion surged 19% year over year in the third quarter of fiscal 2022.

Accenture PLC Revenue (TTM)

Accenture PLC Revenue (TTM)
Accenture PLC Revenue (TTM)

Accenture PLC revenue-ttm | Accenture PLC Quote

Some Risks

Higher talent costs are hurting consulting services providers like Accenture. The consulting industry is labor intensive and heavily dependent on foreign talent.

Moreover, while frequent acquisitions improve revenue opportunities, business mix and profitability, they add to integration risks. Also, they are a distraction for 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 Business Services sector that investors can consider are Cross Country Healthcare CCRN, Gartner IT and Avis Budget CAR, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Cross Country Healthcare has an expected earnings growth rate of 54.2% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.

Cross Country Healthcare has a long-term earnings growth rate of 6.9%.

Gartner’s shares have gained 1.2% in the past year. IT delivered a trailing four-quarter earnings surprise of 24.2%, on average.

The Zacks Consensus Estimate for Gartner's current-year earnings has moved up 13.6% in the past 90 days.

Avis Budget has an expected earnings growth rate of 59.8% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.

Avis Budget has a long-term earnings growth rate of 19.4%.


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