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Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013. (ALBERT GEA/Reuters)

Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013.

(ALBERT GEA/Reuters)

Research Report

'Stalwart' Accenture impresses investing gurus Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

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Ireland-based Accenture Plc is a global firm providing management consulting, technology and outsourcing services, with offices and operations in 56 countries. Its market cap is $51-billion (U.S.)

Accenture has grown EPS at an 18-per-cent pace over the long term (using the average of the three-, four-, and five-year EPS growth rates). That and its high sales ($30B ttm) make it a "stalwart" according to the Peter Lynch-based model. The company trades for 15.1 times ttm EPS and has a 2.5-per-cent dividend, making for a 0.73 yield-adjusted PE-to-growth ratio, part of why the Lynch model has strong interest.

Accenture has a debt/equity ratio of just 0.5 per cent, another reason the Lynch approach likes it.

It has averaged a return on equity of 48 per cent over the past decade, part of why it gets strong interest from the Warren Buffett-based model. Accenture has increased EPS in all but one year of the past decade, which the Buffett model also likes. It has averaged a 17.3-per-cent return on retained earnings (those not paid out as dividends) over past decade, impressing the Buffett model.

The company's 12-per-cent profit margins are six times the industry average.

It has a 9-per-cent earnings yield, part of why the Joel Greenblatt-based model has some interest. And its 59-per-cent return on total capital also impresses the Greenblatt approach.

John Reese is long ACN.

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