Categories Analysis, Earnings, Technology

It’s time for Accenture to reap the dividends of digital push

Accenture (ACN) is one of the rare Wall Street firms that consistently remained resilient to the growing competition in the tech sector. Investors have been encouraged by the company’s stable operations, which is evident in its stock performance.

When the business process service firm reports its fourth-quarter results Thursday at 6:50 AM ET, the market will be looking for adjusted earnings of $1.56 per share on revenues of $10.01 billion. The projection represents a 5.4% year-over-year increase in earnings and about 9.4% growth in revenues. Meanwhile, the positive factors supporting the upbeat outlook point to yet another earnings beat.

Investors have been encouraged by the company’s stable operations, which is evident in its stock performance

In the previous quarter, revenues jumped about 16% owing to broad-based demand growth, which translated into an 18% growth in earnings. All business segments registered double-digit revenue growth in May quarter, prompting the management to issue bullish guidance for the just-concluded quarter and full fiscal year. Going by the trend seen in the most recent quarters, new bookings will be the key revenue driver this time too.

Accenture has been pretty quick in adapting to the changing market dynamics in the technology sector and is currently enjoying the rewards of the advancements it made in emerging areas such as cloud computing and multilevel security solutions. Strategic acquisitions – a continuing process for Accenture for several years now – helped it spruce up the relatively new offerings and broaden the customer base across all markets.

Upgrading Accenture to Hold from Sell, Zacks Tuesday said the company is being rewarded for its investments in the outsourcing business, which according to the research firm will continue in the foreseeable future.
IBM (IBM), which competes with Accenture in several areas of its business, will be reporting results for its most recent quarter on October 16 after the closing bell.

Accenture shares gained 13% since January this year, before hitting a record high last week. After retreating from the peak, the stock started gaining momentum this week ahead of Thursday’s earnings release.

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