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, growth in earnings per share and increase 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 11.9%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 1.34, which illustrates the ability to avoid short-term cash problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.97% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • ACCENTURE PLC has improved earnings per share by 10.4% 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 exceeded that of the S&P 500 and the IT Services industry average. The net income increased by 8.8% when compared to the same quarter one year prior, going from $642.09 million to $698.82 million.

Accenture plc operates as a management consulting, technology services, and outsourcing company worldwide. Accenture has a market cap of $46.92 billion and is part of the technology sector and computer software & services industry. The company has a P/E ratio of 18.5, above the S&P 500 P/E ratio of 17.7. Shares are up 9.5% year to date as of the close of trading on Tuesday.

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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