By Rob Otman
Accenture (NYSE: ACN) is a large cap company that operates within the IT services industry. Its market cap is $83 billion today, and the total one-year return is 8.66% for shareholders.
Accenture stock is underperforming the market. It’s beaten down, but it just beat earnings estimates. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Accenture stock is underperforming the market. It’s beaten down, but it just beat earnings estimates. So is it a good time to buy?
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the IT services industry is 25.99. And Accenture’s ratio comes in at 22.55. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Accenture stock is 0.32. That’s below the IT services industry average of 143.97. The company is less leveraged.
✗ Free Cash Flow per Share Growth: Accenture’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Accenture comes in at 9.57% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Accenture’s profit margin is below the IT services average of 12.51%. So that’s a negative indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Accenture is 51.57%, and that’s above its industry average ROE of 26.05%.
Accenture stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
If you’re interested in finding Strong Buy stocks yourself, check out Fundamental Analysis Pro. It’s a free five-part mini-course that will teach you how to grade stocks like a Wall Street veteran. Click here to learn more. …read more
Source:: Investment You
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