Accenture Stock Analysis: An Investment With A Decent Dividend & Great Growth Prospect

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

 Accenture Stock Analysis

  • Tech-focused investors should consider adding ACN to their portfolio if they are also interested in dividend growth investing.
  • ACN’s dividend yield is only 2% but it has obvious growth opportunity in the BPO industry.
  • Accenture continues to expand its BPO business to include opening branches even in rural provincial areas.
  • This year also saw Accenture do some major acquisitions to further increase its revenue stream.

I’m a capital gains-focused and event-driven tech sector investor. However, it might be prudent for some investors who also love gambling on technology tickers to consider investing in dividend-giving companies like Accenture (ACN).

Accenture is the top dog in the $70 billion global BPO (Business Process Outsourcing) industry. My buy call for ACN right now might a little too late since the stock already delivered a +18% YTD performance. However, Accenture could still be a great long-term play if we also take in to account that it is a consistent dividend giving firm. It is also a clear leader in an industry where there’s a lot of room for future growth.

Why I like Accenture

ACN qualifies for the basic set of criteria that I would like to use for a tech-focused pseudo-dividend growth investing strategy.

  1. It should not have a P/E of more than 30x.
  2. It should have a payout ratio of less than 60%
  3. It should have made increasing dividend payments for the last five years.

In spite of Accenture stock rally this year, it still trades at below 23x P/E ratio. A not too high P/E market valuation is important to me because it prevents attracting the attention of short-sellers. A check on also told me that ACN has a payout ratio of only 42.2%.

The growth prospect of any company is endangered when it spends more than 60% of its income on dividend payments. Accenture’s management is wise enough to save a large portion of its annual profits for future expansion or diversification plans.

Lastly, I like Accenture because it was able to deliver increasing amount of dividend payments for the last 10 years.



Room For Growth

I’m no expert but my idea of dividend-influenced investing will always be influenced by my preference for capital gains growth. Accenture only has a dividend yield of around 2%. However, the chart below from Everest Group is predicting the global business process outsourcing industry could grow to a $104.6 billion/year business by 2019.


As the leading player in the rapidly-growing BPO industry, I therefore expect ACN’s stock price to continue its upward trajectory for the next five years. This year saw Accenture making aggressive acquisition of other companies. Some of the recent important acquisitions are Schlumberger Business Consulting, Cloud Sherpas, and Total Solutions.

These new acquisitions definitely broadens the client base and product portfolio of Accenture. The current management is also brave enough to expand Accenture’s BPO business operations even in rural areas of the Philippines. Accenture, the biggest IT-BPO service provider here in the Philippines, has opened its third service delivery center here in my province, Ilocos Norte. This new branch in Ilocos Norte is part of Accenture Philippines’ P1.07 billion peso or $23.7 million expansion budget for 2015.

The 40% lower minimum labor wage of provincial areas (compared to Metro Manila or Metro Cebu where Accenture also operates) means Accenture will have lower overhead in Ilocos Norte. Local municipalities like San Nicolas, where Accenture has its operations in Ilocos Norte, offer tax incentives for new major investors.

I also expect Accenture to continuously increase its already more than 35,000 BPO employees in the Philippines. The cost savings of outsourcing will continue to be a major reason why more companies will hire Accenture to provide them with cheaper manpower.

The huge population of English-skilled and skilled workers in India and the Philippines will help propel Accenture to new heights. On a global scale, Accenture now has more than 358,000 employees that’s helping it grow its manpower-heavy BPO business.



Accenture is a company with a solid balance sheet, leadership position in a still-growing industry, and a great management team. Accenture planned to hire 95,000 more workers this year – a strong hint that the management has a very bullish outlook for the future.

Compared to its peers in the Information Technology Services industry, ACN still has better Forward P/E, PEG and P/S ratios. Accenture also touts an impressive 83.20% Institutional Ownership and a 53.50% ROI – double that of the average 25.3% ROI of its industry peers.



My buy recommendation for Accenture is also partly helped by I Know First Research’s long-term forecast for ACN. I Know First is predicting that Accenture’s stock has a slim chance to deliver a small increase after one year.


Lastly, the long-term technical indicators are also screaming a Strong Buy for Accenture.