Contents related to Accenture in my book
I introduced the company Accenture (ticker: ACN) in my book, and the content in the book will not be repeated. Investors are invited to refer to the introduction in the special section of my book:
- In the 5-5 section of the book “The Rules of 10 Baggers“, pages 239-241: This entire section has a special introduction to the company Accenture.
- In section 1-1 of the book “The Rules of 10 Baggers“, page 24: Talking about my history of investing in Accenture.
Company introduction
The world’s largest technology consulting company
Accenture (ticker: ACN) is a very good company, and I am still proud to have been a member of Accenture. But I found that even the employees of very large companies or large foreign companies in Taiwan, and even senior executives, do not know this company exists. This surprised me. I learned a lot in this company; for example, how to analyze a company, examine its competitiveness, formulate its competitive strategy, and reform its business processes. You guessed it, this is very similar to the work of the analysts from Wall Street. The threshold for hiring employees is very high. Almost all the colleagues in it are elites who graduated from the prestigious Ivy League schools in the United States. The employees are all very good and extremely smart. At the end of 2021, Accenture has 624,000 employees worldwide.
So far no direct competitor
It is the world’s largest technology consulting firm, and it’s often called the McKinsey of technology industry. The market’s valuation has always been very high. Compared with the valuations of large software vendors such as Microsoft (ticker: MSFT), Facebook (ticker: META), or Alphabet (ticker: GOOGL and GOOG), there has been nothing less. Accenture’s business spans corporate restructuring, business process planning, core business outsourcing, and the introduction of the latest technology; however, its core value is mainly focused on process implementation. Compared with the two major consulting companies that most people know, McKinsey or Boston Consulting Group (BCG), they are more focused on strategic planning. These two are usually not responsible for implementation or actual process rollout. For example, it is Accenture’s job is to find a consultant team to review, change, and re-design the company’s processes one by one.
A good investment target
Not famous
It is a good company and a good investment target, but few people in Taiwan discuss it. In my impression, the financial media only mentioned Accenture in a report about three or four years ago that Accenture was one of the top performed stocks in the U.S. stock market at that time. But it is a well-known company among the large European and American companies, as well as the management class of all large listed companies, because it may be the last resort to save company. The latest piece of news is that Accenture has contracted the US government’s digital currency project.
My book about Accenture
In my recent book, I discussed Accenture as a company. In section 1-1 of my book “The Rules of 10 Baggers“, pages 023-024.
Strong competitive advantages
Obtain the latest technology through acquisitions
Accenture obtains the latest technology and employees with new technology through small mergers and acquisitions, because this is the main purpose of large companies hiring Accenture for projects. Basically, Accenture only works on projects for the world’s top 500 companies. Because of its high asking price, small and medium-sized enterprises simply cannot afford it. Taiwan’s only TSMC has been its customer for a long time. However, Accenture’s internal competition is very fierce. As long as there is no project in hand, employees will soon be dispatched. Therefore, employees who are acquired by mergers and acquisitions cannot stay for a long time. This is also because its employees will not rapidly expand, and of course it will not substantial increase in costs.
Core competitiveness: unique methodology
It is not a problem for the incorporated employees to adapt to Accenture’s culture after acquired, because Accenture’s own expertise is to assist companies in corporate reorganization and process reorganization. Accenture has a very strict methodology when carrying out projects. There are ways to do anything big and small (including how employees wear clothes). This is its core value. All employees must abide by it.
Amazing capital market performance
Durable long-term financial stability
It’s dividends is not taxable
Accenture is registered in Ireland and is not a U.S. company, so dividends will not be withheld by the U.S. government at 30%. Accenture went public on the U.S. stock market in July 2001, began to pay dividends as soon as it went public, its yield rate is considered a relatively high group in the technology industry.
Strong cash flow
In addition to sales growth, Accenture has steadily improved its profits.
| Profitability Metrics | 2017 | 2018 | 2019 | 2020 | 2021 | Growth |
|---|---|---|---|---|---|---|
| Net income (billions) | $3.44 | $4.06 | $4.78 | $5.10 | $5.90 | 14.14% |
| Free cash flow (billions) | $4.45 | $5.40 | $6.02 | $7.61 | $8.40 | 17.21% |
Long-term stock price performance
Annualized return on stock prices in past 2 decades is 16.06%!
But because it is not a US company and the company is very low-key, it is usually not a very hot stock. However, the return on investment in it is very high, the annualized rate of return (aka IRR) since the listing is as high as 16.06% (until 5/11/2021). The following figure is the stock price trend chart of Accenture since its listing, and the stock price trend has been stable and upward for a long time (July 2001 to May 2021).
Past 5 years business growth rate
| Revenue Metrics | 2018 | 2019 | 2020 | 2021 | 2022 (est) |
|---|---|---|---|---|---|
| Revenue (billions) | $41.0 | $43.2 | $44.3 | $50.5 | – |
| Year-over-year growth | 13.57% | 5.36% | 2.54% | 14.00% | 19%-22% |
Recent year’s performance
2021’s business performance
The type of business, and revenue ratio:
- Consulting 54.06%
- Outsourcing 45.94%
Client industry, and revenue ratio:
- Communications, Media & Technology 20.4%
- Financial Services 19.6%
- Health & Public Service 18.8%
- Products 27.7%
- Resources 13.7%
98 of the top 100 customers in fiscal 2021 have been with them for more than 10 years。
Stock performance in past year
| 3/2/2022 data | Number |
| Stock price | 318.33 |
| Market capitalization | 209.55 billion |
| P/E | 33.11 (same as Microsoft) |
| Dividend yield | 1.22% |
| Stock performance in past year | 25.24% |
Market valuation
It is a very stable large-scale technology growth stock. The following table is a comparison among four big companies, Accenture, Microsoft, Alphabet and Facebook:
| Company | Accenture | Microsoft | Alphabet | |
| Stock price (5/19/2021) | 280.97 | 280.97 | 2,271.5 | 313.59 |
| Market Cap (5/19/2021) US$ billion | 1,78.598 | 1,831 | 1,536 | 889.172 |
| P/E ratio | 33.25 | 33.13 | 30.27 | 26.87 |
| Dividend yield | 1.24% | 0.92% | N/A | N/A |
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