Accenture: Overall, an Impressive Buy

Global exposure, resistance to recession, industry spanning diversification, financial stability, transparency and predictable earnings track record, fair valuation considering the note worthy price of growth, and positive groupthink are all things that describe Accenture Ltd (NYSE:ACN). Accenture is an interesting $27B outsourcing company which employs175,000 people in 49 countries, and buys back shares from a devoted annual increase in free cash flow from 10% of revenue annually.

For the last 10 years, ROE has been volatile and bound between an impressive 55% and 81% with earnings before tax margins hovering steadily for the last four years around a predictable 12%. Insiders have stopped selling as of the end of October and have since begun accumulating shares along with some leading funds which buy and own Accenture. The top holders include names like the T. Rowe’s Price Growth and the Vanguard Wellington both owning more than 1% of shares outstanding. Analyst report estimates that growth over the next five years is expected to be a consistent 13.8% to 14.2%, while it currently trades with a PE ratio of about 17.5, which makes the stock cheap compared to the industry and the S&P; Accenture is the cheapest it has been in over 5 years. This is primarily due to recent problems that have since been cleared up and are definitely more than baked in.

Analysts expect approximately 34% of revenue to come from North American sales in FY2008 while the international sales in Europe, India, and Africa account for a majority of Accenture’s steady growth. Consulting and outsourcing are two ways companies can cope with the deficit in talent as baby boomers retire. Fortunately for Accenture, with an impressive client list, they are ready in the five different sectors they service; at the forefront is IT along with 4 other categories the company refers to as government, products, resources and finance.

Accenture reported predictably impressive earnings last week, and since then, implied volatility has deflated from approximately 40% to 30%. However it is still higher than its annual average making the vertical 30/40 August ‘08 bull spread a very likely way to make 62%. Check out the interesting factsheet for more information on the diversity of Accenture.

Disclosure: Starting to Accumulate Accenture.