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Earnings Preview: Accenture Q2 top-line might gain on segment growth

Accenture (NYSE: ACN) is scheduled to post its second-quarter fiscal 2019 financial results before the opening bell on Thursday, March 28, 2019.

While the consulting industry has gained 10.4% over the past year, Accenture stock has moved 8.2%. Zacks Consensus Estimate puts the second-quarter revenue at about $10.3 billion, an expected 7.3%.

This indicates that the Accenture top-line could gain, especially from the major chunk of its segments.

However, given that growing non-operating expenses have come to bite Accenture in the past, it could also be the case this time around. The bottom-line is expected to be hit due to this.

With segments such as Communications, Media & Tech; Health & Public Service; Products; and Resources, the net revenue in the previously reported first-quarter grew 7% to hit $10.6 billion.

Communications, Media & Tech is expected to contribute at least $2 billion this time around, with robust growth in software and platforms globally.

With a banking slump along with the crisis in European capital markets, Financial Services revenue is expected to decline this time around.

Robust performance in consumer goods, retail and travel services and its industrial arm in developing markets might push the top-line up for the Products segment as well.

However, as mentioned earlier, earnings is expected to decline. Zacks analysts estimate $1.57 in earnings per share for the quarter.

LOOKING BACK

Back in January, Accenture’s then Chairman and Chief Executive Officer Pierre Nanterme resigned due to medical reasons. Former CFO David Rowland became the interim CEO, while Nanterme was said to continue at Accenture as an advisor to CEO.

Accenture CEO Pierre Nanterme resigns
Pierre Nanterme, Advisor to CEO               Image Courtesy: Accenture

Nanterme had served 36 years in Accenture, became the CEO of the company in early 2011 and Chairman in February 2013.

In July 2016, Nanterme announced he underwent surgery after being diagnosed with colon cancer and is moving to the next phase of the treatment.

A month before the CEO change, Accenture had reported its first-quarter results, where it topped market estimates on both revenue and earnings.

Then, Accenture said it expected second-quarter revenues to be in the range of $10.10 billion to $10.40 billion, up 6-9% in local currency on assumption of a negative 4% foreign exchange impact vs. the same period last year.

Accenture also updated its outlook for fiscal 2019 back in December, where it said that it expects revenues to grow 6-8% in local currency. Diluted EPS was then expected to be $7.01 to $7.25 for the year.

This time around, along with Segment-wise performances, the market would also be looking for any changes in projections by the company for the full year.

 

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