Which stock of information technology services is a better buy?

0

Headquartered in Dublin, Ireland, Accenture plc (ACN) is a professional services firm providing strategy and advisory services, interactive technology and operations, and outsourcing services worldwide. By comparison, Globant SA (GLOB), headquartered in Luxembourg, operates as a technology services company worldwide. It offers transformation programs, ROI and profitability, new revenue streams and electronic mission.

The IT services market is expected to experience significant growth in the coming months due to increasing demand from almost all industries as part of the widespread digital transformation efforts. In addition, as governments around the world reinstate lockdown and social distancing measures to limit the spread of the highly transmissible variant of COVID-19 Delta, the demand for IT services is expected to increase further in the near term. According to a report by Gartner, Inc. (IT), global spending on IT services is expected to reach $ 1.2 trillion in 2021, an increase of 9.8% from 2020. As a result, ACN and GLOB are expected to benefit from the market growth.

ACN has gained 22.3% year-to-date, while GLOB has returned 15.5%. Additionally, ACN’s 33% gains over the past nine months are greater than GLOB’s 24.2% returns. ACN is the clear winner with gains of 24% versus 12.8% for GLOB in terms of performance over the past six months.

But which of these two titles is the best buy now? Let’s find out.

Latest developments

On August 4, 2021, ACN agreed to acquire Blue Horseshoe, a supply chain strategy and management consultancy and systems integrator specializing in fulfillment and distribution solutions. The acquisition could deepen its customer-centric supply chain transformation capabilities.

On July 8, 2021, GLOB acquired an 80% stake in Walmeric, a company specializing in the development of marketing automation technologies combining lead management, online marketing and sales support. This first product-oriented acquisition strengthens GLOB’s digital marketing and digital sales portfolio.

Recent financial results

ACN’s revenue increased 21% year-on-year to $ 13.30 billion for its fiscal third quarter, ended May 31, 2021. The company’s operating profit increased 24% in year on year to reach $ 2.10 billion. In addition, its new bookings increased 39% year-on-year to $ 15.40 billion. In addition, its EPS stood at $ 2.40, up 26% year-on-year.

GLOB’s revenue increased 41% year-on-year to $ 270.20 million for its fiscal first quarter ended March 31, 2021. Company adjusted gross profit increased 41.5% year-on-year annual revenue to reach $ 107.01 million, while its adjusted net profit grew 52.5%. year over year to $ 34.25 million. Additionally, GLOB’s adjusted EPS was $ 0.83, which is up 40.7% year-over-year.

Past and expected financial performance

ACN’s revenue and EPS have grown at CAGRs of 6.5% and 12.7%, respectively, over the past three years. Analysts expect ACN’s revenue to grow 14% in fiscal 2021 and 10% in fiscal 2022. The company’s EPS is expected to increase 11.7% in fiscal year 2022. the current year and 11.8% next year. And its EPS is expected to grow at a rate of 11.8% per year over the next five years.

In comparison, GLOB’s revenue and EPS have grown at CAGRs of 26.2% and 21.3%, respectively, over the past three years. The company’s revenue is expected to grow by 39.4% in fiscal 2021 and 22.3% in fiscal 2022. Its EPS is expected to grow 38.4% in fiscal year 2021 and 21.2% in fiscal 2022. Additionally, GLOB’s EPS is expected to grow at 100% per year over the next five years.

Profitability

ACN’s revenue of $ 47.95 billion over the past 12 months is significantly higher than GLOB’s $ 892.74 million. ACN is also more profitable, with 15.03% and 12.05% respectively in EBIT and net income margins, compared to 12.05% and 7.02% for GLOB.

Additionally, ACN’s ROE, ROA and ROTC of 32.21%, 11.67% and 20.79%, respectively, compare favorably to GLOB’s 9.20%, 6.47% and 8.13%. .

Evaluation

In terms of forward EV / EBITDA, GLOB is currently trading at 45.30x, which is 115.3% higher than ACN’s 21.04x. And GLOB’s 74.43x non-GAAP forward P / E ratio is 104.6% higher than ACN’s 36.37x.

Thus, ACN is the most affordable stock.

POWR odds

ACN has an overall rating of B, which is equivalent to Buy in our proprietary POWR rating system. In comparison, GLOB has an overall C rating, which translates to Neutral. POWR scores are calculated taking into account 118 separate factors, each factor being weighted to an optimal degree.

ACN and GLOB both have a B rating. This is justified given ACN’s 24% gains over the past six months and 2.2% gains over the past month, and returns of 12.8 % of GLOB over the past six months and gains of 14.2% over the past month.

ACN has an A rating for quality. This is justified given ACN’s 12-month 12-month leveraged FCF margin of 16.83%, which is above the industry average of 12.50%. By comparison, GLOB has a C rating for quality, which is in line with its leveraged FCF margin of 10.08% over the past 12 months, which is below the industry average of 12.50%. ACN also has a B rating for stability, while GLOB has a C rating.

Out of 13 stocks in the Technical Services Outsourcing industry, ACN is ranked # 4. However, GLOB is ranked # 18 out of 43 stocks in the Internet – Services sector.

Beyond what we’ve stated above, we’ve also rated stocks for sentiment, value, and growth. Click here to view all ACN Reviews. Also get all GLOB ratings here.

The winner

Rapid digital advancements are expected to significantly boost the growth of the IT services market in the near future. And while ACN and GLOB should win in the long run, we believe it’s best to bet on ACN now because of its lower valuation and higher profitability.

Our research shows that the chances of success increase when investing in stocks with an overall strong buy or buy rating. Check out all the top rated stocks in the Outsourcing – Technical Services sector here. Also click here for access to all the top rated stocks in the Internet – Services industry.


ACN stock was trading at $ 320.55 per share on Tuesday afternoon, up $ 1.03 (+ 0.32%). Year-to-date, ACN has gained 23.87%, compared to a 19.23% increase in the benchmark S&P 500 over the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal’s a passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach he takes while advising investors in his articles. Following…

More resources for actions in this article


Source link

Share.

About Author

Comments are closed.