Could Accenture Stock’s Cash Flow Spark the Next Rally?
We think Accenture (ACN) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
The stock is available at a significant discount to its 3-month, 1-year, and 2-year highs.
ACN Has Strong Fundamentals
- Cash Yield: Accenture offers an impressive cash flow yield of 11.3%.
- Growing: Revenue growth of 7.3% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: ACN stock is currently trading at 37% below its 3-month high, 43% below its 1-year high, and 54% below its 2-year high.
Below is a quick comparison of ACN fundamentals with S&P medians.
- Accenture Stock Pays Out $39 Bil – Investors Take Note
- Pay Less, Gain More: GIB Tops Accenture Stock
- Stress Testing ACN: Historical Drawdowns and Macro Risks
- Stress Testing ACN: Historical Drawdowns and Macro Risks
- How Low Can ACN Really Go In A Market Crash?
- GIB Tops Accenture Stock on Price & Potential
| ACN | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | IT Consulting & Other Services | – |
| Free Cash Flow Yield | 11.3% | 4.4% |
| Revenue Growth LTM | 7.3% | 6.8% |
| Operating Margin LTM | 15.7% | 18.6% |
| PS Ratio | 1.5 | 3.2 |
| PE Ratio | 14.5 | 24.1 |
| Discount vs 3-Month High | -37.3% | -10.4% |
| Discount vs 1-Year High | -43.0% | -12.5% |
| Discount vs 2-Year High | -53.5% | -14.7% |
*LTM: Last Twelve Months
But What About 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’s stock has seen tough dips even with its strong fundamentals. During the Global Financial Crisis, it dropped about 38%. The 2018 correction wiped out 23%, and the Covid selloff hit around 33%. The inflation shock was the harshest, with a near 40% decline. So, even solid companies like ACN aren’t immune when market turmoil hits hard. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read ACN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell ACN Stock.
Other Stocks Like ACN
Not ready to act on ACN? You could consider these alternatives:
These stocks have positive revenue growth, high free cash flow yield, and are trading at a meaningful discount to 3M, 1Y, and 2Y highs.
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 25.7% and 57.9% respectively, with win rate (percentage of picks returning positive) of above 70%.
Portfolios Beat Stock Picking
Individual stocks are unpredictable. A smart portfolio helps you invest, limits downside shocks, and provides upside exposure.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.