Earnings preview: Accenture stands to end FY19 on a strong note

Accenture plc. (NYSE: ACN) is scheduled to report fourth quarter 2019 earnings results on Thursday, September 26, before the opening bell. Analysts expect the company to report earnings of $1.71 per share on revenue of $11.08 billion. This compares to earnings of $1.58 per share on revenue of $10.15 billion reported a year ago.

This will be the company’s first quarterly earnings report since Julie Sweet took over as CEO at the beginning of this month. Any updates on new strategies or plans is worth watching. Accenture has consistently reported higher revenue and earnings and can be expected to do so in the last quarter of the fiscal year.

Accenture has reported revenue increases across all its segments barring Financial Services. This trend is expected to continue in the fourth quarter aided by growth in Software & Platforms, Health, and Life Sciences. Revenues are also expected to grow across all geographic regions.

In the fourth quarter, Financial Services might deliver growth helped by strength in the insurance business, reversing the previous quarterly trends. The company’s earnings growth is expected to be driven by higher revenues and a lower effective tax rate.

Accenture has made a number of acquisitions – BCT, INSITUM, Pragsis Bidoop and Fairway Technologies – in the quarter and updates on these deals will be worth watching. Pragsis Bidoop is a leader in the areas of AI and advanced analytics and this transaction is expected to help expand Accenture’s capabilities in the European and Latin American markets.

Also read: Accenture Q3 2019 Earnings Conference Call Transcript

In the third quarter of 2019, Accenture beat revenue and earnings estimates. Revenues grew 4% to $11.1 billion while EPS grew 21% to $1.93.

For the fourth quarter, Accenture has guided for revenues in the range of $10.85 billion to $11.15 billion, reflecting a growth of 5-8% in local currency. For the full fiscal year, the company expects revenue growth in the range of 8-9% in local currency and diluted EPS in the range of $7.28 to $7.35.

Shares of Accenture have gained 38% year-to-date and 4% in the past three months. The majority of analysts have rated the stock Buy and the average price target is $202.90.

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