Accenture plc (ACN): A Bull Case Theory 

We came across a bullish thesis on Accenture plc on Compounding Dividends’s Substack by TJ Terwilliger. In this article, we will summarize the bulls’ thesis on ACN. Accenture plc’s share was trading at $250.00 as of November 28th. ACN’s trailing and forward P/E were 20.58 and 18.05 respectively according to Yahoo Finance.

Accenture PLC is a leading global IT services and consulting firm, offering end-to-end solutions spanning strategy, digital transformation, cloud migration, cybersecurity, and outsourcing. Its ability to serve as a single, integrated provider creates high switching costs, as clients are reluctant to replace a partner managing critical systems. Serving a diverse client base across government, finance, healthcare, and technology, Accenture has built a reputation for reliability and scale.

Dividend investors are drawn to its steady cash flows, strong balance sheet, and a long track record of growth, having raised dividends for 21 consecutive years with a five-year compound annual growth rate exceeding 13%, supported by robust free cash flow margins of 15%. Its fundamentals remain solid, with a dividend yield of 2.8%, payout ratio below 50%, and a forward P/E of 17.6x, reflecting a more reasonable valuation than the peak levels seen in 2021.

However, the company faces a deceleration in growth, with revenue rising only about 4% annually over the past three years, and margins remaining stable, resulting in slower earnings growth. This slowdown has driven a de-rating from a 40x P/E in 2021 to roughly 20x today. Looking forward, AI represents both an opportunity and a risk, potentially boosting demand for consulting services or challenging traditional models.

For investors who believe Accenture will maintain its position as a comprehensive technology partner and capitalize on AI-driven demand, the stock offers a financially strong, high-quality business at a more attractive valuation. Yet, slower top-line growth implies that dividend growth and earnings expansion may moderate compared to the strong compounding observed over the past decade, making measured expectations essential.

Previously we covered a bullish thesis on Accenture plc (NYSE:ACN) by Sanjiv in December 2024, which highlighted the company’s leadership in consulting and managed services, strong growth from cloud migration and generative AI, and consistent shareholder returns. The stock has depreciated approximately by 29.81% since our coverage due to slower growth. The thesis still stands as TJ Terwilliger emphasizes dividend reliability, financial strength, and AI-driven opportunities, providing a complementary perspective.

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Disclosure: None.