Accenture Rides On Outsourcing, Acquisitions & Partnerships

On Dec 27, we issued an updated research report on Accenture Plc (NYSE:ACN) .

The company recently reported impressive fiscal first-quarter 2018 results, wherein the top and bottom line figures increased year over year improvement and also surpassed the Zacks Consensus Estimate.

The company’s recent product additions in the analytics application space are anticipated to effectively address the increased demand for digital solutions. Additionally, its partnerships and acquisitions will broaden its clientele and addressed market.

Accenture stock has gained 26.4% year to date, outperforming the 23.8% rally of the industry it belongs to.

Key Factors

Accenture, a provider of management consultancy, technology and outsourcing services, continues to benefit from its outsourcing business. The company witnessed a 6% year-over-year increase in new bookings, which touched $37.4 billion in fiscal 2017.

Notably, the exponential growth in data generation and the need for scalable storage techniques have increased the requirements of cloud computing vendors. In such a scenario, Accenture’s investments to enhance its cloud capabilities will be beneficial. Additionally, the enhancement of its digital marketing capabilities with significant acquisitions like Karmarama, Reactive Media and Acquity Group has been a key catalyst as well.

Moreover, the company’s inorganic additions (37 acquisition deals) worth $1.7 billion in fiscal 2017 are notable revenue boosters. The company’s partnerships with Amazon (NASDAQ:AMZN) Web Services, Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), Salesforce and SAP significantly contribute to its revenue stream.

Additionally, the company’s strong balance sheet has enabled it to invest in growth initiatives. A strong operating cash flow has helped it to return cash through regular quarterly dividends and share repurchases, which has worked well in retaining investors’ interest as well as boosting earnings.

Zacks Rank and Stocks to Consider

Accenture has a Zacks Rank #2 (Buy).

Some of the better-ranked stocks in the broader technology sector are NetApp, Inc. (NASDAQ:NTAP) and IPG Photonics Corporation (NASDAQ:IPGP) , both sporting a Zacks Rank #1 (Strong Buy), and Intel Corporation (NASDAQ:INTC) with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rate for Intel, NetApp and IPG is projected to be 8.42%, 11.34% and 12%, respectively.

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