Accenture plc (ACN) shares have demonstrated impressive growth in the past three months, gaining 7% and outperforming its industry’s 1.1% growth and the 2.4% rise of the S&P 500 composite. This strong performance is attributed to Accenture’s robust growth strategy and a favorable outlook for the consulting sector.
Accenture boasts an impressive Growth Score of B, highlighting the quality and sustainability of its growth. The company projects a long-term earnings per share growth rate of 7.5% over the next three to five years. Earnings are anticipated to increase 2.4% year-over-year in fiscal 2024 and 5.3% in fiscal 2025.
Accenture’s growth strategy revolves around delivering comprehensive value to stakeholders through the strategic use of technology. The company focuses on long-term growth by building a strong digital core with the help of cloud computing, data analytics, artificial intelligence, technological advancements, and investment in talent. This approach positions Accenture as a trusted partner for its clients in navigating the evolving digital landscape.
The company continues to experience strong demand for application modernization and maintenance, cloud enablement, and cybersecurity-as-a-service. These trends are driving growth in Accenture’s managed services business worldwide. Managed services revenues increased 2% year-over-year in the third quarter of fiscal 2024 and 11% in fiscal 2023. The company anticipates these revenues to grow by 4.5% in fiscal 2024 and 4.8% in fiscal 2025.
Accenture has a disciplined acquisition strategy focused on expanding into high-growth areas, acquiring skills and capabilities, and deepening industry and functional expertise. In fiscal 2023, the company invested $2.5 billion in 25 acquisitions.
Accenture’s commitment to shareholder returns makes it a reliable investment for long-term wealth accumulation. In fiscal 2023, 2022, and 2021, the company paid out $2.8 billion, $2.5 billion, and $2.2 billion in dividends, respectively. The company’s steady growth in income is expected to translate into stable cash flow, enabling it to maintain consistent dividend payouts. Accenture’s net income is projected to grow by 5.2% in fiscal 2024 and 5.8% in fiscal 2025.
While Accenture’s growth strategy is promising, the company does face some challenges. The competitive talent market is driving up talent costs, impacting consulting service providers like Accenture. The industry is labor-intensive and relies heavily on foreign talent. Additionally, while advancements in automation and AI present significant opportunities for the industry, they also create uncertainty for consulting firms as clients become increasingly capable of implementing new methods to improve performance.
Overall, Accenture’s strong growth strategy, robust financial performance, and commitment to shareholder returns make it a compelling investment opportunity for investors seeking long-term growth potential.
