Foolish Forecast: Everybody Loves Accenture

Motley Fool Inside Value recommendation Accenture (NYSE: ACN) reports third-quarter earnings Thursday night. Let's see what's in store for the IT-consulting specialist.

What Fools say:
Here's how Accenture's CAPS rating stacks up against those of some of its peers and competitors:

Data from Motley Fool CAPS as of June 25.

Judging by input from our CAPS players, Accenture is the top dog in its pack. Roughly 95% of the 879 players who have issued a rating on the stock gave it a thumbs-up. Their reasons vary from fundamental strength to strong cash flows, though the bearish minority points out that high-cost consulting services might not attract much business in a weak economy.

What management does:
While the standard profit margins look stable enough, and sales growth has picked up a bit lately, the all-important cash-generation machine seems to need some oil.

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
With HP buying EDS, the consulting sector is consolidating at the moment. While Accenture's $23.3 billion market cap makes for a rather large sweetmeat in the eyes of prospective suitors, it is a well-managed business with some of the lowest P/E and PEG ratios in the industry. A nice cash balance brings down the enterprise value to about $20 billion, which puts the company in a price range that someone like Big Blue might be able to afford.

A buyout today still looks like a long shot, despite strength in the sector and lots of cash floating around in the competition's coffers. I'm hoping to see an end to the downward trend in cash flow margins this time, to underpin the company's strong balance sheet further. Do that for a while, and maybe then the courtship dances will start.