Accenture (ACN) had one of the better Tuesday trading sessions on Wall Street, with stock price of the consulting giant rising $4.17 to close at $320.79. The consulting and technology bellwether’s stock showed some of the most impressive action, though volume was still under its typical trading volume. As the market landscape continues to evolve, investors and analysts have been keeping an especially close eye on Accenture’s performance.
The company’s stock traded hands with a volume of 1,098,825 shares, below its average volume of 2,960,053. Even with this depressed trading volume, the stock price still rose, demonstrating a valuable vote of investor confidence. With a current market capitalization of $200.92 billion, Accenture has established itself as the dominant industry player.
In combination with the valuation multiples, Accenture’s financial ratios tell an interesting story about a company with strong growth prospects. Moreover, the company’s price-to-earnings (P/E) ratio is 26.90. This reflects how much the market investors are willing to pay for each dollar of earnings. Its PEG ratio, a metric that takes into account earnings growth, is 3.23. ACN’s beta of 1.33 indicates that the stock is riskier than the average stock on the market.
Stock Performance and Moving Averages
Accenture’s stock has faced an up and down year, seen in the pic below. Its fifty-day simple moving average is $303.16, and its two-hundred-day simple moving average is $336.65. These averages provide an interesting historical backdrop for the stock’s price movement. Investors are better equipped to judge what trends might develop and where support might be found.
The stock’s one-year low is $275.01 and their one-year high is $398.35. This dramatic swing demonstrates the volatility and potential opportunities for investors. The stock price has recently been trading in the neighborhood of its one-year low. This stormy seas environment provides an eye-popping attractive entry point for some types of investors.
It’s common for technical analysts to rely on moving averages to determine if an asset is a good buy or sell. When a stock price moves above its moving average, this is usually the indicator of an upward trend, or bullish momentum. On the other hand, when it dips below the moving average, it is a sign of bearish sentiment.
Liquidity and Debt Analysis
An additional measure of Accenture’s liquidity and financial health is a liquidity ratio analysis. Its quick ratio and current ratio both stand at 1.47, meaning the company is well equipped to cover short-term liabilities. These liquidity ratios indicate that Accenture is able to pay off its current liabilities using its current assets.
The quick ratio removes inventory from current assets, giving a more conservative look at liquidity. In Accenture's case, the equal values of the quick and current ratios suggest that inventory does not play a significant role in the company's short-term asset composition.
Additionally, Accenture’s debt-to-equity ratio of 0.17 indicates low use of leverage as part of its overall capital structure. This very low ratio is indicative of the fact that this company is much more dependent on equity financing versus debt, taking much less financial risk.
Market Position and Future Outlook
Accenture is a global management consulting, technology services and outsourcing company. With a wide range of services offered and a global foothold, the company maintains a robust stronghold in the marketplace. As enterprises look to adopt and execute upon transformative journeys, Accenture is uniquely positioned to benefit from the opportunities being unlocked.
Additionally, the company’s financial ratios and stock performance provide important indicators for investors. Despite the volume being below average on Tuesday, the strong price action performance is a clear sign of accumulation taking place. Strategic investors will be just as keen to track Accenture’s performance, given their financials, market position and (at least in the short-medium term) growth prospects.
Accenture needs to have strong balance sheet and keep its debt in check. Adapting to shifting market realities will be just as important to its sustainability over the long haul. Of equal importance is the company’s strategic initiatives and investments in innovation, which we believe will be paramount in propelling future growth.
