Here's Why Investors Should Hold on to Accenture (ACN) Stock

Accenture plc ACN is currently benefiting from its acquisitions and strong liquidity.

ACN’s earnings and revenues are anticipated to grow 21.4% and 21.9%, respectively, in fiscal 2022.

Factors That Augur Well

Acquisitions have been one of the key growth strategies for Accenture for a while. They enabled ACN to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. The recent buyout of YSC Consulting is expected to strengthen Accenture’s advisory services to the CEO, C-suite and board on ways to enhance performance and build leadership teams for the future.

Another acquisition of Trancom is expected to reinforce Accenture’s digital engineering, manufacturing and logistics capabilities to offer hyper-automation solutions at scale.

Accenture's current ratio (a measure of liquidity) stood at 1.27 at the end of third-quarter fiscal 2022, higher than the 1.24 recorded at the end of the prior quarter. The gradually increasing current ratio bodes well for Accenture. Moreover, a current ratio of more than 1.5 is usually considered good for a company, implying that the risk of default is less.

A Key Risk

Higher talent costs due to a competitive talent market are hurting consulting services providers like Accenture. The industry is labor-intensive and heavily dependent on foreign talent.

Zacks Rank and Stocks to Consider

Accenture currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. CAR, Genpact Limited G and CRA International, Inc. CRAI.

Avis Budget sports a Zacks Rank #1 (Strong Buy) at present. CAR has an earnings growth rate of 108.4% for 2022.

Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.

Genpact carries a Zacks Rank #2 (Buy) at present. G has a long-term earnings growth expectation of 12.3%.

Genpact delivered a trailing four-quarter earnings surprise of 10.1%, on average.

CRA International flaunts a Zacks Rank of 1, currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.
 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.