Stock (Symbol) |
Accenture (ACN) |
Stock Price |
$307 |
Sector |
| Technology |
Data is as of |
| June 24, 2024 |
Expected to Report |
| September 26 |
Company Description |
 Accenture plc is a global professional services company engaged in providing a range of services in strategy and consulting, technology, and operations.
It provides a range of services, including application services, artificial intelligence, automation, business process outsourcing, business strategy, change management, cloud, data and analytics, digital commerce, digital engineering and manufacturing, finance consulting, infrastructure, marketing, mergers and acquisitions, metaverse, operating models, security, supply chain management, technology consulting, technology innovation and zero-based transformation. It helps organizations to achieve transformational impact with solutions in C-Suite assessment, team dynamics and various others. It also offers automated production lines that leverage the cloud, data and artificial intelligence (AI) that makes factories and plants smarter through Eclipse Automation. Source: Refinitiv22 |
Sharek’s Take |
 In last quarter’s earnings call, Accenture (ACN) continued to miss estimates, raising concerns about its growth prospects and ability to handle economic challenges. Last qtr, ACN reported -2% profit growth as revenue growth was -1%. The bright spot for the quarter was new bookings, which jumped 22%. Bookings are an indicator of future revenue growth. It’s the business the company booked, but most likely hasn’t received revenue from as Accenture has to get its team of consultants to work on the project. The stock jumped on the news, but still remains in a downtrend as growth is very slow right now.
Accenture, formerly Anderson Consulting, helps companies and organizations solve business challenges and transform their organizations. Employing more than 700,000 people, the company serves more than three-fourths of the Fortune Global 500. Enterprises use Accenture for Consulting on what to do, then utilize its Outsourcing divisions including finance, accounting, supply chain, marketing, and sales to get work done. Accenture’s Intelligent Platform is a combination of core platforms, cloud computing, the Internet of Things, artificial intelligence, machine learning, and security. It uses platforms from companies including SAP, Oracle, Microsoft, Salesforce, Workday, and more. Accenture is a leading systems integrator for AWS, Azure, and Google Cloud. Management is investing substantially in its business making acquisitions in these hot areas to drive growth going forward. Now, digital, cloud, and security services have been accounting for a majority of new bookings. Last qtr stats include:
Accenture is a well-run organization. This is a quality stock with an excellent safety rating, a decade of record profit growth every year, a stock dividend, and a stock buyback program. Analysts give the stock an Estimated Long-Term Growth Rate of 7% a year, but I feel this is a 12% grower in a normal economy. The stock yields 1.7%. In Fiscal 2023, management returned around $7.2 billion to investors, including $2.8 billion in dividends and $4.3 billion in stock buybacks. ACN is part of the Conservative Growth Portfolio. |
One Year Chart |
 ACN broke out of the downtrend after the company reported last qtr’s earnings. Still, qtrly profit Estimates are weak. I figured these numbers would look better than this (+3%).
The stock’s P/E of 24, which is around where it should be. Note I’m calculating this P/E on 2025 profit estimates instead of 2024 as we are in the company’s Fiscal 4th qtr. The Est. LTG is 7%. This company is a slow grower right now. |
Earnings Table |
 Last qtr, Accenture reported -2% profit growth and missed expectations of -1% growth. Revenue growth was -1%, year-over-year, missed the expectation of flat 0%. Consulting revenue was -3% year-over-year and Managed Services revenue was +2%. New bookings increased 22%. Adjusted operating margin was 16.4%, slightly up from 16.3% a year ago.
The company gained 23 clients with quarterly bookings greater than $100 million, bringing the total to 92. Consulting bookings was 44% total new bookings while Managed Services bookings was 56% of total new bookings. ACN had over $900 million in new Gen AI bookings last quarter, the company has reached $2 billion in GenAI sales year-to-date and $500 million in revenue. Annual Profit Estimates are down. Management stated they see clients continuing to prioritize investing in large-scale transformations. For 2024, management expects revenue to be in the range of 1.5% to 2.5% growth in local currency. Qtrly Profit Estimates are for 3%, 3%, 1%, and 9%, growth the next 4 qtrs. These numbers fell. For next quarter, management expects revenue growth to be in the range of 2% to 6% in local currency. Analysts think revenue will increase 2% next qtr. |
Fair Value |
 My Fair Value P/E is still at 26 which works out to $335 a share, upside of 9%. The stock is $307 this quarter.
Note I’m now looking ahead to 2025 profit estimates as ACN’s fiscal year-end is August 31. |
Bottom Line |
 Accenture (ACN) was first named Anderson Consulting as it was the business and technology division of Arthur Anderson. Accenture was spun off as an IPO in 2001, and since then has gone from $15 to more than $300.
This company is growing at a turtle’s pace right now. But momentum just shifted and I envision accelerating growth ahead, even if analysts don’t. ACN moves up from 23rd to 21st in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 21 of 24 |
