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Accenture PLC Stock Buy Recommendation Reiterated (ACN)

Editor's Note: 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.

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, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ACN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ACCENTURE PLC reported significant earnings per share improvement 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 $3.84 versus $3.40 in the prior year. This year, the market expects an improvement in earnings ($4.28 versus $3.84).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 71.1% when compared to the same quarter one year prior, rising from $643.92 million to $1,101.80 million.

Accenture plc operates as a management consulting, technology services, and outsourcing company worldwide. Accenture has a market cap of $50.4 billion and is part of the technology sector and computer software & services industry. The company has a P/E ratio of 17.00, below the S&P 500 P/E ratio of 18.00. Shares are up 16.5% 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.

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