Co. Spotlight - Accenture |  - Co. Spotlights available via RSS feed
| To The Financial Services Rescue |  
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| | ACN | $38.26 | The Good: Globally diversified.
The Bad: Hard to find.
The Beautiful: Exceptionally high Return on Equity. | P/E | 17 | | PSR | 1.4 | | ROE | 61% | | Debt/Eq. | 0.01 | | Div. Yield | 1.1% |
May 29, 2008 - Accenture Ltd. (ACN-NYSE) works to help businesses improve their performance. The world's largest consulting firm, Accenture offers management consulting, information technology and systems integration, and business process outsourcing (BPO) services to customers around the globe. The company divides its practices into five main operating groups -- communications and high technology, financial services, public service, products, and resources -- that encompass more than 15 industries. Accenture, which is domiciled in Bermuda but headquartered in New York, operates from more than 150 locations in about 50 countries.
Revenues and profits are growing nicely at this consulting giant. In the fiscal second quarter, sales were up 17% to $6.1 billion while profits were 36% higher compared to the same quarter last year (fiscal year ends in August). That put Earnings Per Share (eps) at 64 cents. For the year, analysts expect eps of $2.60 and next year look for $2.90. Over the last 5 years earnings grew, on average, 13.5% a year. In the next 5 years, analysts forecast eps growth of 15% a year on average while revenues grow by 14%. Revenues last year were $21.453 billion, up 17.7% from 2006. Accenture offers what businesses want and need: how to adapt and increase performance in a hostile economic environment. In the second quarter, the company booked $6.4 billion of new contracts, more than 1/4 of the firm's annual sales. The current housing slump, mortgage mess and credit crunch have clients ringing up for more or new services with an emphasis on better productivity and higher profitability. As long as financial institutions have extraordinary amounts of bad loans, ACN will be exceptionally busy. The company produced higher profits and revenues in each of the last 5 years. With strong cash flow, the company is buying back its own stock. Management stated it wants to retire $3 billion worth (market cap is $28.1 billion). In the second quarter, 16.3 million shares were bought. Total stock outstanding is 742.6 million. More numbers: There was a one-time 42 cent dividend paid in 2007, up from 35 cents in 2006. Expectations are for the dividend to rise again this year and paid in December. Net profit margin was 5.8% last year with predictions of $6.7% this year. Current assets are about 1.2 times current liaibilities. Book value is $2.75 a share. Debt is less than 1% of capital. The real show stopper here is the Return on Equity. In 2007 it was 60%. This year, analysts predict 84% and 64% next year. ACN has a lot of good going for it. While most firms struggle through economically challenging times, this company prospers from it. Of course, as with all service companies, the key to continued success is retaining good people and hiring and training new ones. Every night, all the assets go out the door, and investors need to see them return the next day for this investment to keep rising. - Company Web site: www.accenture.com - Ted Allrich |
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