Accenture Shares — 3 Pros, 3 Cons

Regardless of the economic environment, Accenture (NYSE: ACN ) always finds
ways to grow. Just look at the company's latest quarterly report. Revenues
increased by 14% to $6.7 billion and cash flows came to $1.2 billion. On the
news, Accenture's shares rose 4.3% to $55.92. But can the company keep up the
momentum? Will the lackluster macro situation finally take a toll? To see, here
are Accentures pros and cons: Pros Strong global platform. Accenture has more
than 236,000 employees across 120 countries. Customers include 94 of the
companies on the Fortune Global 100 as well as more than three-quarters of the
Fortune Global 500. Accenture also provides a broad range of services. One is
management consulting, which helps reduce costs and improve operations. There
also is a big focus on helping companies with outsourcing and information
technology systems. For example, Accenture has a thriving business implementing
software from operators like Oracle (NASDAQ: ORCL ) and SAP (NYSE: SAP ).
Strategic moves. Accenture's management has a good track record of finding the
next mega-trends. For example, they were spot-on with the move toward
outsourcing. But now Accenture is looking at other hot areas. These include
cloud computing, e-health, mobile, the smartgrid, analytics and social media.
Rock-solid balance sheet. During the past year, the company spent $2.8 billion
on share repurchases and dividend payments. In fact, the dividend yield is a
decent 1.7%. Cons Government business. This certainly is a significant part of
Accenture's business. However, with growing budget deficits, governments are
tightening their belts. This is the case in both the U.S. and Europe.
Discretionary projects. Major consulting projects easily can be delayed or even
cancelled. This is especially the case during recessions, when companies try to
find ways to cut back on major cost items. Competition. Accenture has many
direct competitors like Deloitte Consulting, Bain & Company and Booz Allen
Hamilton Holding (NYSE: BAH ). What's more, major IT companies have moved into
the marketplace. Some of the players include IBM (NYSE: IBM ), Hewlett-Packard
(NYSE: HPQ ) and Dell (NASDAQ: DELL ). Verdict In its latest earnings release,
Accenture indicated that it is predicting a general slowdown in the global
economy, but the company still thinks it will show continued growth. In fact,
Accenture understands that it is during tough times that some of the biggest
opportunities emerge. This was the case in 2008-09 when the company continued to
invest in its business. The good news is bookings continue to be healthy they
hit a quarterly record of $8.4 billion, which brings the annual total to $28.8
billion. In other words, there should be lots of juice for growth, both in the
short and long term. Thus, the pros outweigh the cons on the stock for now. Tom
Taulli is the author of "All About Short Selling" and "All About
Commodities." You can also find him at Twitter account @ttaulli. He does not
own a position in any of the stocks named here.