Accenture (ACN) Closes DPS Buyout; Boosts Cybersecurity

Last Friday, Accenture Plc (NYSE:ACN) , the global IT services provider, announced that it has completed the acquisition of Defense Point Security, LLC DPS. However, the financial details of the transaction were kept under wraps.

The two companies had entered into an acquisition deal in October. The move marks Accenture’s efforts toward improving its government security portfolio.

Based in Alexandria, VA, the privately held cybersecurity company, DPS, was founded in 2007. DPS is well known for providing advanced cyber defense solutions to the U.S. federal government. Additionally, it specializes in providing advanced Security Operations Center (SOC) expertise, cyber operations, security engineering and cyber analytics to the same.

With the successful completion of the acquisition, DPS has now become a wholly owned subsidiary of Accenture Federal Services (AFS). The company claims that its “federal business has served every cabinet-level department and 30 of matt the largest federal organizations.”

The latest acquisition is expected to expand Accenture’s federal services capabilities as well as strengthen its leadership position in providing cybersecurity solutions to the U.S. federal departments.

As per David Moskovitz, chief executive at Accenture Federal Services, “The addition of DPS’ specialized cyber defense tools and methodologies, together with our powerful client insights, will further propel our strategy to be a leading provider of end-to-end, federal enterprise security services.”

Acquisitions – A Key Growth Strategy

Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far this year, the company has either completed or has signed about 12 acquisition deals across various business segments, including IT security, CRM capabilities and strategy consulting. Last year, it had closed 21 takeovers.

These acquisitions have enabled Accenture to foray into newer markets, diversify and broaden the product portfolio, and maintain its leading position. A strong cash balance of $3.50 billion and an operating cash flow of $2.52 billion at the end of third-quarter fiscal 2016 are expected to support Accenture’s inorganic growth strategy.

Bottom Line

Accenture’s long-term prospects look promising due to its sustained focus on new and innovative product launches, continuous investments in enhancing digital and marketing capabilities, as well as major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.

Notably, shares of Accenture have been steadily treading higher on a year-to-date basis. The stock generated a return of 12.2%, which outperformed the Zacks Consulting industry’s gain of 11%.

Currently, Accenture carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other stocks worth considering in the broader technology sector are Cirrus Logic Inc. (NASDAQ:CRUS) , FormFactor Inc. (NASDAQ:FORM) and NVE Corporation (NASDAQ:NVEC) , all sporting a Zacks Rank #1. Cirrus Logic witnessed upward estimate revisions in the last 60 days and surpassed the Zacks Consensus Estimate thrice in the trailing four quarters, with an average positive surprise of 53.68%.

Estimates for FormFactor also moved up in the last 60 days. It surpassed the Zacks Consensus Estimate thrice in the trailing four quarters, with an average positive surprise of 21.97%.

NVE Corp. witnessed upward estimate revisions in the last 60 days and surpassed the Zacks Consensus Estimate thrice in the trailing four quarters, with an average positive surprise of 8.77%.

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