Accenture Plc (NYSE:ACN) operates as a management consulting, technology services and outsourcing company. The company was founded in 1955 and is based in Dublin, Ireland.
The current Accenture trailing twelve months (ttm) P/E ratio is 16.1 The forward P/E ratio is 14.4, making Accenture an attractive investment possibility.
In the last month, Accenture has increased in price 6.98%, with a one-year change of 22.23%. With a performance in the stock of over 20% it is not hard to imagine why Accenture beat the broad market average index of the S&P 500. The year to date difference is an impressive 25.21% better return.
The recent history of earnings beats helps to explain the performance of the stock. Take a look at the quarterly trend and the delivery of results above the expectations.
Accenture has an upcoming dividend in the amount of $0.68 that can be gained by buying the stock before the ex-dividend date of October 12, 2011.
To minimize risk, a dividend capture strategy can be used to give an investor several choices.
In combination with my buying the stock and after checking company updates, I may offer to sell the October $44.00 strike call for $0.64 over the intrinsic value. The option may get exercised early for a gain. If not, after qualifying for the dividend, I will attempt to close out the trade with a gain of near $0.17. Accenture recently reported quarterly earnings, lowering earnings headline risk during the life of the covered call.
Taking a look we can see what outcomes are possible. Accenture stock gets called away before ex-dividend date and I make $0.64. I continue through the ex-dividend date and the stock gets called away at expiration and I make $1.32. The option premium falls before expiration day and I close out for a gain of $0.81. Accenture stock falls below $44 and I own Accenture for an average price of 42.68 (factoring in option and dividend payments).
My last step (completed before making a trade on the same day) is to check company announcements and news sources for possible events that may cause the stock price to move. This is especially important during earnings season.
I research the different call options and calculate the expected probabilities based on Beta, Bid, Offer, Volume traded the current day, open interest, and time value / implied volatility. The options offer some level of protection from down moves in the stock, and provide revenue to cover the times that the options do not fully cover down moves in the stock. Income is not needed from the option premiums, so a break even from premiums received/stock losses ratio is a win.
I use a proprietary blend of technical analysis, financial crowd behavior and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Nothing in the article should be considered investment advice, but you may want to use this article as a starting point of your own research with your financial planner. I use Seeking Alpha, Edgar Online, and Yahoo Finance for most of my data.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ACN over the next 72 hours.