Accenture plc (NYSE: ACN) has gained significant market share over the years and is thriving on continued demand across industries and markets. The professional service company made a quick recovery after suffering a slowdown in the early days of the pandemic when enterprises reduced IT spending in response to the widespread business disruption.
Fair Valuation
More recently, when the market was battered by a stock selloff a few months ago, Accenture was not spared – the stock is down 33% from the all-time highs of December 2021. Currently trading at a one-year low, ACN offers a rare investment opportunity as it is estimated to rebound in the coming weeks and match the long-term average. The valuation is favorable compared to most of its peers in the tech space, which makes the stock more attractive.
Accenture plc Q3 2022 Earnings Call Transcript
The Dublin-based business consulting services provider has achieved solid sales growth in recent years. Anticipating the momentum to continue in the coming quarters, the management recently raised its full-year revenue guidance. Earlier, the company streamlined its services to offer what it calls ‘total enterprise reinvention,’ which means digitally transforming every aspect of customers’ businesses to achieve optimum efficiency.
Q4 Report on Tap
When Accenture reports fourth-quarter results on September 22 before the opening bell, the market will be looking for a 32% year-over-year increase in net earnings to $2.58 per share. Revenues are expected to grow 28% to $15.17 billion, which is in line with the management’s guidance.
In the third quarter of 2022, all five operating segments witnessed double-digit revenue growth, leading to a 22% rise in total revenues to $16.2 billion. Consequently, earnings rose 16% annually to $2.79 per share. The highlight of Accenture’s balance sheet is its relatively low debt and strong cash flows, marked by sharp year-over-year increases.
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“We delivered very strong overall results in the third quarter reflecting very strong double-digit revenue growth across all dimensions of our business as well as continued operating margin expansion as we continue to invest at scale in our business and our people. We continue to lead the industry with these results demonstrating the relevance of our services and our trusted client and ecosystem partnerships,” said Accenture’s CFO KC McClure, commenting on third-quarter results.
Road Ahead
The management has identified five tailwinds that would drive growth over the next decade — total enterprise reinvention, talent, sustainability, the Metaverse continuum, and the ongoing tech revolution. However, supply chain issues and cost inflation will remain a concern in the foreseeable future.
ACN closed the last trading session sharply lower, extending the recent weakness. The stock has declined around 13% in the past 30 days alone.