Accenture (ACN) and ACI Worldwide (ACIW) Critical Survey

Accenture (NYSE: ACN) and ACI Worldwide (NASDAQ:ACIW) are both mid-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Dividends

Accenture pays an annual dividend of $2.66 per share and has a dividend yield of 1.8%. ACI Worldwide does not pay a dividend. Accenture pays out 48.9% of its earnings in the form of a dividend. ACI Worldwide has raised its dividend for 7 consecutive years.

Valuation and Earnings

This table compares Accenture and ACI Worldwide’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Accenture $36.77 billion 2.70 $3.45 billion $5.44 27.67
ACI Worldwide $1.01 billion 2.64 $129.53 million $0.33 67.85

Accenture has higher revenue and earnings than ACI Worldwide. Accenture is trading at a lower price-to-earnings ratio than ACI Worldwide, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Accenture has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, ACI Worldwide has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Profitability

This table compares Accenture and ACI Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Accenture 9.37% 42.65% 17.82%
ACI Worldwide 3.72% 11.02% 4.55%

Analyst Ratings

This is a summary of recent recommendations for Accenture and ACI Worldwide, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accenture 2 8 12 0 2.45
ACI Worldwide 0 1 2 0 2.67

Accenture currently has a consensus target price of $144.05, suggesting a potential downside of 4.31%. ACI Worldwide has a consensus target price of $25.50, suggesting a potential upside of 13.89%. Given ACI Worldwide’s stronger consensus rating and higher probable upside, analysts plainly believe ACI Worldwide is more favorable than Accenture.

Institutional and Insider Ownership

72.5% of Accenture shares are held by institutional investors. 0.2% of Accenture shares are held by company insiders. Comparatively, 4.2% of ACI Worldwide shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Accenture beats ACI Worldwide on 10 of the 17 factors compared between the two stocks.

Accenture Company Profile

Accenture plc is a professional services company serving clients in various industries and in geographic regions, including North America, Europe and Growth Markets. The Company provides management and technology consulting services. Its segments include Communications, Media and Technology; Financial Services; Health and Public Service; Products, and Resources. The Communications, Media & Technology segment serves communications, electronics, technology, media and entertainment industries. The Financial Services segment serves banking, capital markets and insurance industries. The Health & Public service segment serves healthcare payers and providers, and government departments and agencies, public service organizations, educational institutions and non-profit organizations. The Products segment serves a set of interconnected consumer-relevant industries. The Resources segment serves chemicals, energy, forest products, metals and mining, utilities and related industries.

ACI Worldwide Company Profile

ACI Worldwide, Inc. develops, markets, installs and supports a line of software products and services primarily focused on facilitating electronic payments. The Company also distributes or acts as a sales agent for software developed by third parties. Its products and services are used principally by financial institutions, retailers, billers and electronic payment processors, both in domestic and international markets. The Company’s products are sold and supported through distribution networks covering three geographic regions, including the Americas, Europe/Middle East/Africa (EMEA) and Asia/Pacific. The Company’s products and services are used by a range of transaction-generating endpoints, including automated teller machines (ATM), retail merchant point-of-sale (POS) terminals, bank branches, corporations and Internet commerce sites. The Company provides payment solutions to financial institutions globally for both retail banking and transaction banking services.

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