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Accenture (ACN)
NYSE:ACN
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Accenture
(NYSE:ACN)
75Outperform
Positive Factors
Execution and Leadership
Accenture's execution is best-in-class among IT service providers in the coverage.
Market Share
ACN is viewed as a best-in-class operator that will likely take increasing market share when the cycle turns due to its execution and leadership position in next-gen tech solutions like GenAI.
Revenue Growth
Digital will continue to help drive strong revenue growth with slow and steady margin expansion over time.
Negative Factors
Booking Growth
Flat y/y cc bookings growth in the quarter was well below consensus estimates calling for +6% y/y reported growth.
Government Contracts
Management noted that federal agencies are reviewing contracts with the top 10 consulting firms, which includes AFS, leading to slower government procurement and negatively affecting bookings and revenue.
Macroeconomic Concerns
The price target for ACN has been lowered due to a more uncertain growth outlook, reflecting a cautious stance amid macroeconomic concerns.
Accenture (ACN) vs. S&P 500 (SPY)
Market Cap
$178.45B
Dividend Yield1.94%
Average Volume (3M)4.03M
Price to Earnings (P/E)23.5
Beta (1Y)0.77
Revenue Growth4.10%
EPS Growth9.78%
CountryUS
Employees801,000
SectorTechnology
Sector Strength40
IndustryInformation Technology Services
Share Statistics
EPS (TTM)12.12
Shares Outstanding626,025,800
10 Day Avg. Volume3,801,043
30 Day Avg. Volume4,030,711
Financial Highlights & Ratios
PEG Ratio2.40
Price to Book (P/B)N/A
Price to Sales (P/S)2.88
Price to Cash Flow (P/CF)46.70
P/FCF Ratio53.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$372.63Price Target Upside30.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering20
Accenture Business Overview & Revenue Model
Company DescriptionAccenture (ACN) is a global professional services company with leading capabilities in digital, cloud, and security. Combining unmatched experience and specialized skills across more than 40 industries, it offers strategy and consulting, interactive, technology, and operations services. Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.
How the Company Makes MoneyAccenture generates revenue primarily through its five main business segments: Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources. It provides a range of services including management consulting, technology integration, and outsourcing solutions. Accenture earns money by charging fees for its consulting and implementation services, often structured as time-based billing or project-based fees. Additionally, the company has partnerships with leading technology providers such as Microsoft, SAP, and Oracle, which enhance its service offerings and contribute to revenue through technology integration projects and cloud services. Accenture's focus on digital, cloud, and security solutions also positions it for growth in modern business environments, further driving its revenue.
Accenture Financial Statement Overview
Summary
Accenture demonstrates strong financial health with solid revenue growth, efficient cost management, low leverage, and impressive return on equity. While the cash flow position remains strong, a decline in free cash flow growth is a minor concern.Income Statement
Accenture shows strong performance with consistent revenue growth, evidenced by a 4.5% increase in the TTM compared to the previous year. The gross profit margin stands at 32.2%, and the net profit margin at 11.4%, indicating efficient cost management and profitability. EBIT and EBITDA margins are healthy at 15.3% and 16.9%, respectively, which reflects operational efficiency. Overall, the company demonstrates a robust income statement with a strong growth trajectory.88
Very Positive
Balance Sheet
The balance sheet is solid with a low debt-to-equity ratio of 0.20, indicating low financial leverage and sound risk management. The return on equity is impressive at 26.3%, showcasing the company's ability to generate returns on shareholder investments. The equity ratio is 48.9%, emphasizing a healthy balance between equity and total assets, which points to financial stability. Overall, Accenture maintains a strong and stable balance sheet.85
Very Positive
Cash Flow
Accenture has a positive cash flow performance, with a free cash flow of $6.19 billion in the TTM period. Although the free cash flow growth rate has declined by 28.1%, the company maintains a high operating cash flow to net income ratio of 0.85, indicating robust cash generation relative to reported earnings. The free cash flow to net income ratio is 0.81, highlighting effective cash management. Despite some decline in free cash flow growth, Accenture's cash flow position remains strong.82
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 67.22B | 64.90B | 64.11B | 61.59B | 50.53B | 44.33B | Gross Profit |
| 21.64B | 21.16B | 20.73B | 19.70B | 16.36B | 13.98B | EBIT |
| 10.27B | 9.60B | 8.81B | 9.37B | 7.62B | 6.51B | EBITDA |
| 11.84B | 11.19B | 10.59B | 10.55B | 7.62B | 7.99B | Net Income Common Stockholders |
| 7.68B | 7.26B | 6.87B | 6.88B | 5.91B | 5.11B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 5.13B | 5.01B | 9.05B | 7.89B | 8.17B | 8.51B | Total Assets |
| 51.31B | 55.93B | 51.25B | 47.26B | 43.18B | 37.08B | Total Debt |
| 3.16B | 4.12B | 3.15B | 3.33B | 3.51B | 3.49B | Net Debt |
| -1.96B | -883.92M | -5.90B | -4.56B | -4.66B | -4.93B | Total Liabilities |
| 23.35B | 26.76B | 24.79B | 24.52B | 23.08B | 19.58B | Stockholders Equity |
| 27.12B | 28.29B | 25.69B | 22.11B | 19.53B | 17.00B |
| Cash Flow | Free Cash Flow | ||||
| 6.19B | 8.61B | 9.00B | 8.82B | 8.40B | 7.62B | Operating Cash Flow |
| 6.53B | 9.13B | 9.52B | 9.54B | 8.98B | 8.22B | Investing Cash Flow |
| -4.00B | -7.06B | -2.62B | -4.26B | -4.31B | -1.89B | Financing Cash Flow |
| -2.10B | -6.06B | -5.65B | -5.31B | -4.93B | -4.05B |
Accenture Technical Analysis
Negative
285.06
Price Trends
349.17
Negative
352.72
Negative
342.91
Negative
Market Momentum
-12.61
Negative
37.89
Neutral
61.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACN, the sentiment is Negative. The current price of 285.06 is below the 20-day moving average (MA) of 313.62, below the 50-day MA of 349.17, and below the 200-day MA of 342.91, indicating a bearish trend. The MACD of -12.61 indicates Negative momentum. The RSI at 37.89 is Neutral, neither overbought nor oversold. The STOCH value of 61.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ACN.
Accenture Risk Analysis
Accenture disclosed 21 risk factors in its most recent earnings report. Accenture reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Accenture Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $178.45B | 23.52 | 27.26% | 1.94% | 4.10% | 9.78% | |
75 Outperform | $72.86B | 21.73 | 33.16% | 2.50% | 3.08% | 11.92% | |
72 Outperform | $36.24B | 16.26 | 16.21% | 1.76% | 1.98% | 7.16% | |
68 Neutral | $30.12B | 26.05 | 16.59% | 2.20% | -3.41% | 67.87% | |
67 Neutral | $225.78B | 37.89 | 24.14% | 2.94% | 1.45% | -20.56% | |
57 Neutral | $18.57B | 9.42 | -13.42% | 2.72% | 5.01% | -23.43% | |
51 Neutral | $39.47B | 52.55 | 4.65% | 2.12% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
ACN
Accenture
285.06
-41.30
-12.65%
CTSH
Cognizant
68.74
-1.22
-1.74%
FIS
Fidelity National Info
69.90
-1.81
-2.52%
INFY
Infosys
16.58
-0.79
-4.55%
IBM
International Business Machines
227.48
43.84
23.87%
WIT
Wipro
2.79
0.03
1.09%
Accenture Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: -12.15% | Next Earnings Date: Jun 20, 2025
Earnings Call Sentiment Neutral
Accenture delivered strong revenue and bookings growth, driven by strategic investments in Gen AI and managed services, along with significant recognition as an industry leader. However, the company faces challenges with federal revenue uncertainty and operating margin pressures, amidst an overall elevated level of economic and geopolitical uncertainty.Highlights
Strong Bookings and Revenue Growth
Accenture reported quarterly bookings of $20.9 billion, with 32 clients having quarterly bookings greater than $100 million. Revenue grew by 8.5% in local currency, reaching $16.7 billion, which was at the top end of their guided range.
Gen AI Milestone
Accenture achieved a milestone in Gen AI with $1.4 billion in new bookings and approximately $600 million in revenue this quarter.
Recognition and Industry Leadership
Accenture was recognized as one of the World's Most Ethical Companies for the 18th year in a row and ranked number one in its industry for the 12th consecutive year on Fortune's list of the World's Most Admired Companies.
Investment in Strategic Areas and Talent
Accenture invested over $250 million in strategic acquisitions and over 15 million training hours for its employees to advance skills in solutions and technology, including Gen AI.
Strong Performance in Managed Services
Managed Services revenue grew 8% in U.S. dollars and 11% in local currency, driven by double-digit growth in technology managed services.
Lowlights
Federal Revenue Uncertainty
The slowdown in new procurement actions and contract assessments by the U.S. General Service Administration has created uncertainty in Accenture's federal business, which represented approximately 8% of global revenue.
Operating Margin Contraction
Operating margin contracted by 20 basis points compared to adjusted operating margin last year, largely due to higher subcontractor costs.
Elevated Economic and Geopolitical Uncertainty
Accenture noted an elevated level of uncertainty in the global economic and geopolitical environment impacting client activities.
Company Guidance
During Accenture's Second Quarter Fiscal 2025 Earnings Conference Call, the company reported strong performance with $20.9 billion in bookings and revenue of $16.7 billion, reflecting an 8.5% growth in local currency. The operating margin slightly contracted by 20 basis points compared to the previous year, while earnings per share (EPS) grew by 2% over Q2 FY24. Accenture highlighted significant investments, including over $250 million in six strategic acquisitions and approximately 15 million training hours for their workforce. They also expanded their data and AI workforce to around 72,000, progressing towards a goal of 80,000 by FY26. Despite some challenges in the federal sector due to procurement slowdowns and contract reviews, the company continues to see strong demand for large-scale transformations, particularly in areas like Gen AI, where they achieved $1.4 billion in new bookings and around $600 million in revenue this quarter. Looking forward, Accenture projects 5% to 7% revenue growth for the full fiscal year 2025, maintaining a focus on strategic investments and sustainable growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.