Accenture Reaps Benefits of Slow Economy - Barron’s

July 20, 2008

At least Accenture, a management consulting and technology outsourcing firm, has been benefiting from the current economic downturn. Companies looking to cut costs and streamline operations have contributed to the $6.77 billion in new bookings in Accenture’s recent FQ3. Yet Barron’s says the company has stayed under investors radars: They don’t realize Accenture (ACN) is the one doing all that corporate downsizing for all those companies now. Its 14 times forward P/E is lower than the 18 times forward P/E that industry rival EDS (EDS) was recently bought for. And Accenture has a strong balance sheet, with about $3.4 billion in cash and investments. It services 90% of all Fortune 100 companies, and is renowned for its dedicated corporate culture and seeing projects through to the end.

The blue-chip IT firm is thriving from helping U.S. companies realign while simultaneously enjoying strong global revenues. Accenture raised its 2008 guidance and forecasted a diluted EPS to $2.63-$2.65, up from its previous range of $2.55-$2.60. In FQ3, revenues jumped 20% while earnings rose 36% to $0.74/share. Analysts say the stock has a 20% upside to the high $40s, from $39.50 currently.

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