Accenture (ACN) Is Today's Storm The Castle Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Accenture ( ACN) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Accenture as such a stock due to the following factors:

  • ACN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $331.8 million.
  • ACN has traded 1.1 million shares today.
  • ACN is trading at 2.48 times the normal volume for the stock at this time of day.
  • ACN crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ACN:

Accenture plc provides management consulting, technology, and business process outsourcing (BPO) services worldwide. The company operates through Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources segments. The stock currently has a dividend yield of 2.6%. ACN has a PE ratio of 17.5. Currently there are 8 analysts that rate Accenture a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Accenture has been 2.5 million shares per day over the past 30 days. Accenture has a market cap of $50.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.27 and a short float of 2.8% with 4.41 days to cover. Shares are down 2.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Accenture as a buy. 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, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 9.9%. 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 1.30, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $1,649.21 million or 29.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.83%.
  • ACCENTURE PLC has improved earnings per share by 6.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ACCENTURE PLC reported lower earnings of $4.52 versus $4.93 in the prior year. This year, the market expects an improvement in earnings ($4.85 versus $4.52).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the IT Services industry average. The net income increased by 4.5% when compared to the same quarter one year prior, going from $671.00 million to $701.02 million.

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