Accenture vs. Globant: Which Information Technology Services Stock is a Better Buy?

NYSE: ACN | Accenture PLC Cl A News, Ratings, and Charts

ACN – With rapid digital transformation and an increasing dependence on advanced technology solutions, the demand for information technology services is expected to grow. As such, prominent companies in this space Accenture (ACN) and Globant (GLOB) should benefit from the industry tailwinds. But which of these stocks is a better buy now? Read more to find out.

Based in Dublin, Ireland, Accenture plc (ACN) is a professional services company that provides strategy and consulting, interactive technology and operations, and outsourcing services worldwide. In comparison,  Globant S.A. (GLOB), which is headquartered in Luxembourg, operates as a technology services company worldwide. It offers transformational programs, ROI and cost efficiency, new revenue streams, and E-mission.

The information technology services market is expected to grow significantly in the coming months owing to increasing demand from almost every industry as part of widespread digital transformation efforts. Furthermore, because governments worldwide are reinstating lockdown and social distancing measures to limit the spread of the highly transmissible COVID-19 Delta variant, the demand for information technology services is expected to rise further in the near term. According to a Gartner, Inc. (IT) report, worldwide IT services spending is expected to reach $1.2 trillion in 2021, representing a 9.8% increase from 2020. So, both ACN and GLOB should benefit from the growing market.

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

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On August 04, 2021, ACN agreed to acquire Blue Horseshoe, a supply chain management and strategy consulting firm and systems integrator that specializes 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 firm that specializes in developing marketing automation technology combining lead management, online marketing, and sales enablement. This first product-oriented acquisition strengthens GLOB’s portfolio of digital marketing and digital sales.

Recent Financial Results

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

GLOB’s revenue increased 41% year-over-year to $270.20 million for its fiscal first quarter, ended March 31, 2021. The company’s adjusted gross profit grew 41.5% year-over-year to $107.01 million, while its adjusted net income increased 52.5% year-over-year to $34.25 million. Also, GLOB’s adjusted EPS was $0.83, representing a 40.7% year-over-year rise.

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 increase 14% in its fiscal year 2021 and 10% in fiscal 2022. The company’s EPS is expected to grow 11.7% in the current year and 11.8% next year. And  its EPS is expected to grow at an 11.8% rate per annum 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 increase 39.4% in its fiscal year 2021 and 22.3% in fiscal 2022. Its EPS is expected to grow 38.4% in fiscal 2021 and 21.2% in fiscal 2022. Also, GLOB’s EPS is expected to grow at a 100% rate  per annum over the next five years.

Profitability

ACN’s $47.95 billion trailing-12-month revenue is significantly higher than GLOB’s $892.74 million. ACN is also more profitable, with 15.03% and 12.05% respective  EBIT  and net income margins, compared to GLOB’s 12.05% and 7.02%.

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

Valuation

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 forward non-GAAP P/E ratio is 104.6% higher than ACN’s 36.37x.

So, ACN is the more affordable stock.

POWR Ratings

ACN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In comparison,  GLOB has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

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

ACN has an A grade for Quality. This is justified given ACN’s 16.83% trailing-12-month levered FCF margin, which is higher than the 12.50% industry average. In comparison, GLOB has a C grade for Quality, which is in sync with its 10.08% trailing-12-month levered FCF margin, which is lower than the 12.50% industry average. ACN also has a B grade for Stability, while GLOB has a C grade.

Of the 13 stocks in the Outsourcing – Tech Services industry, ACN is ranked #4. However, GLOB is ranked #18 of 43 stocks in the Internet – Services industry.

Beyond what we’ve stated above, we have also rated both the stocks for Sentiment, Value, and Growth. Click here to view all the ACN ratings. Also, get all the GLOB ratings here.

The Winner

Rapid digital advancements are expected to drive the information technology services market’s growth significantly in the near future. And even though both ACN and GLOB are expected to gain in the long run, we think it is better to bet on ACN now because of its lower valuation and higher profitability.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Outsourcing – Tech Services industry here. Also, click here to access all the top-rated stocks in the Internet – Services industry.


ACN shares were trading at $320.55 per share on Tuesday afternoon, up $1.03 (+0.32%). Year-to-date, ACN has gained 23.87%, versus a 19.23% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting 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 that he follows while advising investors in his articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
ACNGet RatingGet RatingGet Rating
GLOBGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) has continued on a bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in this early edition of his 2022 Stock Market Outlook. Read on for full details below...

:  |  News, Ratings, and Charts

How Recent Bearish Sentiment Will Impact the Stock Market

Last week, the S&P 500 (SPY) fell during a short trading week. Multiple factors were weighing on investor sentiment. First was September's history for being a weaker month for stock performance. In addition, the previous week's August payrolls miss seemed to linger on investors' minds due to concerns that the delta variant of COVID was slowing the rebound in the economy. The real estate sector led declines as long-term interest rates increased. Consumer staples and utility stocks performed the best. In terms of market cap, the small-cap Russell 2000 Index underperformed the market after two strong weeks of outperforming the larger benchmarks. Growth stocks also outperformed Value stocks. I’ll discuss this and more below…

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

:  |  News, Ratings, and Charts

3 Growth Stocks You Can Buy at a Reasonable Price

Even with growth stocks falling last week, investors are still pouring money into companies with strong growth potential. When you add in a value component, you get the best of both worlds. That's why investors should consider growth at a reasonable price stocks such as Westlake Chemical Corporation (WLK), ManpowerGroup (MAN), AutoNation, Inc. (AN).

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

Read More Stories

More Accenture PLC Cl A (ACN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ACN News