Is Wall Street Underestimating Accenture Stock’s Potential?

We think Accenture (ACN) stock could be a good value buy. It is currently trading lower than average valuation, is growing, even though modestly, and has strong margins to go with its low valuation.

Buying stocks with low valuations or trading well below their peaks but maintaining strong margins allows investors to capture mean reversion and valuation re-rating potential. The downside risk is potentially less because high-margin businesses can sustain earnings and recover faster when sentiment or market conditions improve

What Is Happening With ACN

ACN may be down -1.6% so far this year but is now 33% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago, and also trades at a P/E (Price-to-Earnings) ratio that is below S&P 500 median.

The stock may not reflect it yet, but here is what’s going well for the company. Accenture’s operational efficiency improved notably in Q1 FY26 due to a restructuring that prioritized high-value AI and cloud services. Record new bookings of $20.9 billion, including $2.2 billion from advanced AI solutions, are translating into strong top-line activity. While the company maintains a steady demand outlook, market recalibration for tech services and modest overall growth expectations (2-5% FY26 guidance) contribute to its discounted valuation. New acquisitions and AI partnerships bolster future service offerings.

ACN Has Reasonable Fundamentals

• Revenue Growth: 6.6% LTM and 4.3% last 3 year average. Low growth, but this is a margin and value play.
• Strong Margin: Nearly 14.3% 3-year average operating margin.
• No Major Margin Shock: Accenture has avoided any large large margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, ACN stock trades at a PE multiple of 21.5

Below is a quick comparison of ACN fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While ACN stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Accenture fell 38% during the Global Financial Crisis, 33% in the Covid pandemic, and nearly 40% on the inflation shock. Even the 2018 correction knocked it down over 22%. These aren’t small dips. Shows that no matter how solid the company looks, big market sell-offs hit even top names hard. Risk is always there. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ACN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell ACN Stock.

Stocks Like ACN

Not ready to act on ACN? Consider these alternatives:

1. PayPal (PYPL)
2. Copart (CPRT)
3. Lululemon Athletica (LULU)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Meaningfully below 1Y high
3. Current P/S < last few year average
4. Strong operating margin
5. P/E ratio below S&P 500 median

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
• Strategy consistent across market cycles

Move Beyond Single Stocks With A Multi Asset Portfolio

Stocks can jump or crash but different assets move on different cycles. A multi asset portfolio helps you stay invested while cushioning swings in equities.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices