Accenture: Stick With This Winner

Mar. 23, 2020 8:55 AM ETAccenture plc (ACN)5 Comments
WG Investment Research profile picture
WG Investment Research


  • Accenture's stock is down big so far in 2020.
  • However, the company recently reported solid Q2 2020 results that beat the top- and bottom-line estimates.
  • I hold a position in Accenture, and I plan to add shares on any pullbacks. As such, I believe that investors should consider sticking with this winner.

Accenture's (NYSE:ACN) stock has been pulled down by the COVID-19 related concerns, and rightfully so, as the impact on economic activity has already been significant. But, ACN shares are only slightly underperforming the broader market over the first 2+ months of 2020.

ChartData by YCharts

However, let's also remember that Accenture has outperformed the broader market over the last 1-, 3- and 5-year time periods. Simply put, this company is a winner. So yes, there are company-specific risk factors that need to be considered, especially given the broader market uncertainty, but I believe that Accenture's management team has this global IT consulting and outsourcing company well-positioned for the future. As such, I believe that investors should stick with this winner.

The Macro Concerns Are Real

The COVID-19 related concerns should not be taken lightly so, in my opinion, it makes sense that the market has been in a free fall since the global health scare reached the U.S. The IT industry, and more specifically the IT Services sector, has felt a tremendous amount of pain due to the concerns related to COVID-19.

Source: Fidelity

The sector has moved down in lockstep with the broader market and I believe that this poor performance will likely continue until sentiment (and actual economic activity) shows signs of improvement. To this point, Goldman Sachs expects major cutbacks in consumer activity almost across the board through at last April 2020.

Source: Goldman Sachs

This is not great news for the likes of Accenture, or most other companies for that matter. However, as I recently described, Accenture entered 2020 in a great position - both operationally and financially - the company is well-capitalized and has a balance sheet that will allow for it to weather this storm.

Additionally, it is important to also note that U.S. economic activity

ChartData by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long ACN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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