On Mar 28, we issued an updated research report on Accenture plc ACN.
Accenture recently delivered better-than-expected results for second-quarter fiscal 2016. Also, revenues increased on a year-over-year basis, reflecting increased focus on the Consulting and Outsourcing business, new bookings and continuous return of shareholders’ value. Moreover, the upbeat revenue and earnings guidance for fiscal 2016 were encouraging.
Notably, the company hit 52-week highs on two consecutive days in response to the second-quarter results and solid fiscal 2016 guidance. Year-to-date, the stock gained approximately 9.3%.
Accenture’s solid performance across insurance, banking and healthcare segments reflects strong demand for its services, thereby boosting long-term growth prospects. The company has been steadily gaining traction in its Outsourcing business, primarily driven by the increase in demand for technology that can improve operating efficiencies and cut costs.
The upward trend continued during fiscal second quarter, with Outsourcing revenues growing 6% in local currency on a year-over-year basis. The improvement mainly resulted from rising demand for Accenture’s outsourcing solutions supported by most of its operating industry groups across all geographic regions.
Furthermore, considering the growing need for digital marketing, we are encouraged by Accenture’s efforts to enhance its digital marketing capabilities through acquisitions. Accenture made several acquisitions last year to expand its product and service offerings as well as client base, including Reactive Media Pty Ltd., Hytracc Consulting, Enkitec, i4C Analystics, CRMWaypoint, PacificLink Group and Tquila UK.
However, we remain cautious due to the intensifying competition from the likes of Cognizant Technology Solutions CTSH and International Business Machines Corporation IBM, and uncertainty in the IT spending environment.
Currently, Accenture carries a Zacks Rank #2 (Buy). Another stock worth considering in the consulting industry is CBIZ Inc. CBZ, sporting a Zacks Rank #1 (Strong Buy).
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