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Accenture (ACN) Gains on Strong Balance Sheet & Acquisitions

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We recently issued an updated report on Accenture plc (ACN - Free Report) .

The company is steadily gaining traction in its outsourcing businesses, backed by strong demand to assist clients with the operation and maintenance of digital-related services as well as cloud enablement. In the fourth quarter of fiscal 2020, Accenture’s outsourcing revenues increased 6% year over year.

Accenture PLC Revenue (TTM)

Accenture PLC Revenue (TTM)

Accenture PLC revenue-ttm | Accenture PLC Quote

Acquisitions have been one of the key growth strategies for Accenture. They have enabled the company to enter new markets, diversify and broaden its product portfolio as well as maintain its leading position. The recently announced acquisition of N3 will bring in nearly 2,200 employees to Accenture globally, along with AI and Cl capabilities. Together, they are expected to offer a differentiated, data-driven approach aimed at helping companies drive their sales growth. Another recent buyout, CreativeDrive is expected to boost Accenture’s content, digital-marketing, media and commercial-service offerings.

Accenture has a solid balance sheet. The company’s cash and cash equivalent balance of $8.42 billion at the end of fourth-quarter fiscal 2020 was well above the debt level of $54.1 million, underscoring that the company has enough cash to meet its debt burden.

Meanwhile, higher talent costs due to a competitive talent market and Trump’s stringent policies on immigration are hurting consulting-service providers like Accenture. The industry is labor-intensive and heavily dependent on foreign talent.

Zacks Rank and Key Picks

Accenture currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Republic Services (RSG), ICF International, Inc. (ICFI) and NV5 Global (NVEE), each stock carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Republic Services, ICF International and NV5 Global 7.9%, 10% and 13.7%, respectively.

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