Accenture Could Add To Your Net Worth

by Peter Cohan | September 9, 2011 10:16 am

Accenture Could Add To Your Net Worth

Arthur Andersen went away in the wake of its client, Enron’s, bankruptcy. But before that, its consulting unit, Andersen Consulting, was spun off. Once that Andersen name was tainted, Andersen Consulting became Accenture (NYSE:ACN[1]), and it went public in July 2001. Since then, the stock has risen 248% to $52.17. Does it have further to rise?

Accenture has been hitting the cover off the ball when it comes to earnings. In June, Accenture reported third-quarter 2011 EPS of 93 cents that beat the Zacks Consensus Estimate[2] by four cents. Its earnings were 25% above those of the year before. Accenture’s revenue of $6.72 billion was 20.6% higher than the year before and nearly $500 million more than the Zacks Consensus Estimate.

And Accenture was optimistic about its future back in June. For its fiscal 2011, Accenture raised its revenue growth guidance to a range between 14% and 15% — above its previous range between 11% and 14%. Accenture also boosted its EPS guidance to between $3.36 and $3.40 from an earlier guided range of $3.22 to $3.30. The new guidance is between nine and 13 cents above the Zacks Consensus Estimate of $3.27.

Is all this good news enough to justify an investment in Accenture stock? Here are three reasons in favor:

One reason against:

Accenture stock has come off its all-time high of $63.43 in July 2011. But to make it a screaming buy, it would need to drop further — possibly below $40. Given the volatility in the market these days, it would be worth waiting to pick Accenture up at a lower price.

Peter Cohan has no financial interest in the securities mentioned.

Endnotes:
  1. ACN: http://studio-5.financialcontent.com/investplace/quote?Symbol=ACN
  2. Zacks Consensus Estimate: http://www.zacks.com/stock/news/55857/Accenture+Beats,+Guides+Favorably
  3. all of its past five earnings reports: http://investing.money.msn.com/investments/earnings-estimates?symbol=acn
  4. 11.9% to $3.78 in fiscal 2012: http://investing.money.msn.com/investments/earnings-estimates?symbol=acn

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