When stocks are plummeting in price, it’s hard to start buying into all the uncertainty. But a disciplined long term investor knows there’s no better time to buy than right now. And I’m not talking about buying into speculative, high-risk stocks. I’m talking about the well-proven, robust track record Accenture plc. Why? Size. Financial health. Proven performance. View our latest analysis for Accenture
Accenture plc provides consulting, technology, and outsourcing services worldwide. Established in 1989, and run by CEO Pierre Nanterme, the company provides employment to 435,000 people and with the company’s market cap sitting at US$101.59B, it falls under the large-cap category. Bear market volatility can have a short-term impact on large, well-established companies, but in the long-run, these businesses are likely to prevail. This is because fundamentally, nothing has changed. A fall in share price is hardly detrimental to its financial health and business operations. So, large-cap stocks are a safe bet to buy more of when the stock market is selling off.
With US$25.21M debt on its books, Accenture has to pay interest periodically. This means it needs to have enough cash on hand to meet these upcoming expenses. Accenture generates enough earnings to cover its interest payments, however its interest expenses are already well-covered by its interest income. Moreover, its cash flows from operations copiously covers it debt by over 2x, much higher than the safe minimum of 0.2x. Its cash and short-term investment is also sufficient to cover other upcoming liabilities, which means ACN is financially robust in the face of a volatile market.
ACN’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 7.96%, outperfoming the market growth rate of 7.95%. It has also returned an ROE of 38.04% recently, above the industry return of 12.98%. This consistent market outperformance illustrates a robust track record of delivering strong returns over a number of years, increasing my conviction in Accenture as an investment over the long run.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. Accenture tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for ACN’s future growth? Take a look at our free research report of analyst consensus for ACN’s outlook.
- Valuation: What is ACN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ACN is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.