Stock Analysis

What Is Accenture plc's (NYSE:ACN) Share Price Doing?

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NYSE:ACN
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Let's talk about the popular Accenture plc (NYSE:ACN). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$344 and falling to the lows of US$271. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Accenture's current trading price of US$271 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Accenture’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Accenture

Is Accenture still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 26.85x is currently trading slightly above its industry peers’ ratio of 26.08x, which means if you buy Accenture today, you’d be paying a relatively reasonable price for it. And if you believe Accenture should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Accenture’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Accenture generate?

earnings-and-revenue-growth
NYSE:ACN Earnings and Revenue Growth June 17th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Accenture's earnings over the next few years are expected to increase by 41%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ACN’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ACN? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on ACN, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for ACN, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 1 warning sign for Accenture you should be aware of.

If you are no longer interested in Accenture, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Accenture?

Accenture plc, a professional services company, provides strategy and consulting, interactive, industry X, song, and technology and operation services worldwide.

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Rewards

  • Price-To-Earnings ratio (24.8x) is below the IT industry average (28.3x)

  • Earnings are forecast to grow 7.75% per year

  • Earnings have grown 12.9% per year over the past 5 years

Risks

  • Significant insider selling over the past 3 months

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1Y Return

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