Accenture PLC Stock Buy Recommendation Reiterated (ACN)

NEW YORK (TheStreet) -- Accenture (NYSE:ACN) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:

• ACN's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• ACN's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
• Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the IT Services industry and the overall market, ACCENTURE PLC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
• ACCENTURE PLC has improved earnings per share by 10.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ACCENTURE PLC increased its bottom line by earning $3.40 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($3.84 versus $3.40).
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the IT Services industry average. The net income increased by 9.7% when compared to the same quarter one year prior, going from $628.01 million to $689.22 million.

Accenture plc operates as a management consulting, technology services, and outsourcing company worldwide. The company has a P/E ratio of 14.7, equal to the average computer software & services industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Accenture has a market cap of $36.17 billion and is part of the technology sector and computer software & services industry. Shares are up 7% year to date as of the close of trading on Wednesday.

You can view the full Accenture Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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