Accenture share price forecast for 2020
After a wide-reaching restructure focusing on three growth areas paid dividends, the Accenture share price forecast for 2020 is looking rosy
Accenture company overview
0'>Accenture has ballooned to become one of the world’s biggest professional services providers. It may be headquartered in Dublin, but it very much has a presence on the global stage – and the company’s stock is listed on the New York Stock Exchange. Here, we’ll be looking at the Accenture share price forecast for the rest of 2020, and assess how the firm has performed of late.
ACN stock analysis: What Accenture is worth
Any Accenture share prediction should first look at the company’s market capitalisation – not least because this can offer a valuable insight into whether the business is undervalued. At the time of writing, 0'>Accenture has a market cap of $140.5bn. The company’s price to earnings ratio currently stands at 28.53 – a rather high figure that tells us current investors are expecting strong earnings and growth in the not-too-distant future.
Indeed, the most recent financial results didn’t seem to disappoint. In the first quarter of the 2020 financial year, revenue stood at $11.4bn – a 7 per cent increase when calculated in US dollars. Demand for its services rose in North America and Europe, but the biggest jump was to be found in Accenture’s “growth markets” at 13 per cent. The firm’s fastest-growing sectors were health and public service, as well as products. All of this translated into earnings per share of $2.09 – also a 7 per cent increase.
Accenture described the results as proof of the “continued successful execution of our growth strategy” – and announced it planned to repurchase shares worth $729m, with a dividend of $508m for investors. These healthy, upbeat figures help illustrate those high P/E ratios.
Accenture’s business model
To understand ACN stock performance of late, it’s worth delving into the company’s business model. Accenture had about 505,000 employees as of 2019, and its clients are spread across more than 120 countries.
The firm is split into five divisions. While Strategy focuses on “driving growth and digital transformation” for clients, Consulting helps other businesses to “design and implement transformational change programmes”. Digital helps companies to reinvent through the use of advanced analytics and artificial intelligence, while Technology’s responsibilities include delivering “cloud and infrastructure services”. Last but not least, you have Operations, which focuses on assisting businesses with finance, accounting, marketing, sales, procurement and the supply chain.
Over recent years, 0'>Accenture has said much of its growth has been directly attributable to a focus on what it describes as “the New” – digital, cloud and security. The company claims this sector now represents 65 per cent of its revenues, making it number one in terms of global market share. Not bad for a brand that originally started as a subdivision of an accounting firm.
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Accenture share price history
We begin our 0'>ACN stock analysis way back in 2001, when Accenture held its initial public offering. The IPO market on Wall Street was rather tepid at the time – and the track record of professional services companies wasn’t great either. Despite this, Accenture’s shares made their debut on the New York Stock Exchange at $14.50 – towards the upper limit of $15 that analysts were expecting.
The first day of trading went OK, but it wasn’t necessarily something to celebrate. Accenture shares opened at $15.10 and ended the day at $15.17, which was still a 5 per cent boost on the original price. But as IPO.com’s chief analyst Kyle Huske told CNN Money at the time: “Nobody cares about it. The IPO market is pretty quiet.”
For some investors at the time, it might have been worth caring about. At the time of writing, the stock was worth $214 – 14 times more than its value immediately after the IPO. The Accenture share price trend shows its stock price has steadily risen since 2001 – with growth particularly accelerating in the past decade.
Accenture stock price forecast for 2020
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Let’s move on to the Accenture share price forecast for the coming year. Given the firm’s laser-like focus on “the New” – those areas of growth that we were discussing earlier in the article – it’s entirely possible that we’ll see the company go from strength to strength in the coming months.
According to CNN Business, 23 analysts have a median forecast of $225 for Accenture stock in the 12 months ahead – a 5 per cent upside. The highest estimate is $240, a 12 per cent rise, while the lowest is $200, a 6.7 per cent decline. Most of the analysts polled recommend buying the stock.
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