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Strategic Enhancements Aid Accenture (ACN) Amid Competition
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Accenture plc (ACN - Free Report) is strategically enhancing its cloud and digital marketing suite through acquisitions and partnerships. However, it encounters pricing pressure due to fierce competition from key industry players.
Accenture reported better-than-expected third-quarter fiscal 2023 results, wherein both earnings & revenues increased year over year. Adjusted earnings (excluding 4 cents from non-recurring items) of $3.19 per share surpassed the Zacks Consensus Estimate by 7.7% and improved 14.3% from the year-ago fiscal quarter’s reading. The bottom line benefited from higher revenues, streamlined operations and optimization of office space to reduce costs.
Revenues of $16.6 billion also beat the consensus estimate by a slight margin and increased 2.5% from the prior-year fiscal quarter’s tally on a reported basis and 9% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
In the year-to-date period Accenture has increased 15.4% compared with its industry’s and 16.9% growth in the S&P 500 composite.
Accenture has been expanding its capabilities through strategic acquisitions. It recently acquired Melbourne-based digital design agency Bourne Digital and Texas-based IT consulting services provider Nextira. With these latest acquisitions, ACN aims to strengthen its SAP offerings, boost engineering capabilities in cloud solutions, and provide enhanced digital design and user experience services to clients across various industries.
Driven by robust demand for services that enhance operational efficiencies and cost savings, Accenture has witnessed steady growth in both its outsourcing and consulting businesses. In fiscal year 2022, the company reported significant increases in net revenues from outsourcing and consulting, fueled by strong demand for digital, cloud, and security-related services.
ACN's current ratio (a measure of liquidity) was 1.37 at the end of third-quarter fiscal 2023. This was higher than the prior quarter’s and the year-ago quarter’s reading of 1.27 each. The increasing current ratio bodes well for Accenture as it implies that the risk of default is less.
Some Concerning Points
Rising talent costs and competitive labor market are concerns for consulting providers like Accenture, as automation and AI advancements bring opportunities as well as uncertainties.
Zacks Rank and Key Picks
ACN currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services sector may consider the following better-ranked stocks.
Avis Budget (CAR - Free Report) : The Zacks Consensus Estimate for Avis Budget’s second-quarter 2023 revenues and earnings suggests declines of 1.6% and 39.5% year over year to $3.19 billion and $9.65 per share, respectively. It has an impressive earning surprise history. CAR beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 65.2%.
Maximus (MMS - Free Report) : The Zacks Consensus Estimate for Maximus’ second-quarter 2023 revenues and earnings indicates increases of 6.9% and 46.2% year over year to $1.2 billion and $1.14 per share, respectively. It has an impressive earning surprise history, beating the consensus mark in three instances and missing once, the average surprise being 9.6%.
MMS has a VGM Score of B and a Zacks Rank of 1.
Rollins (ROL - Free Report) : The Zacks Consensus Estimate of Rollins’ second-quarter 2023 revenues and earnings implies growth of 12.6% and 15% year over year to $803.6 million and 23 cents per share, respectively. It has an impressive earning surprise history, beating the consensus estimate in three of the trailing four quarters and missing once, the average surprise being 5.53%.
ROL currently carries a Zacks Rank of 2 (Buy) and a Growth Score of A.
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Strategic Enhancements Aid Accenture (ACN) Amid Competition
Accenture plc (ACN - Free Report) is strategically enhancing its cloud and digital marketing suite through acquisitions and partnerships. However, it encounters pricing pressure due to fierce competition from key industry players.
Accenture reported better-than-expected third-quarter fiscal 2023 results, wherein both earnings & revenues increased year over year. Adjusted earnings (excluding 4 cents from non-recurring items) of $3.19 per share surpassed the Zacks Consensus Estimate by 7.7% and improved 14.3% from the year-ago fiscal quarter’s reading. The bottom line benefited from higher revenues, streamlined operations and optimization of office space to reduce costs.
Revenues of $16.6 billion also beat the consensus estimate by a slight margin and increased 2.5% from the prior-year fiscal quarter’s tally on a reported basis and 9% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
In the year-to-date period Accenture has increased 15.4% compared with its industry’s and 16.9% growth in the S&P 500 composite.
Accenture PLC Price
Accenture PLC price | Accenture PLC Quote
Current situation of ACN
Accenture has been expanding its capabilities through strategic acquisitions. It recently acquired Melbourne-based digital design agency Bourne Digital and Texas-based IT consulting services provider Nextira. With these latest acquisitions, ACN aims to strengthen its SAP offerings, boost engineering capabilities in cloud solutions, and provide enhanced digital design and user experience services to clients across various industries.
Driven by robust demand for services that enhance operational efficiencies and cost savings, Accenture has witnessed steady growth in both its outsourcing and consulting businesses. In fiscal year 2022, the company reported significant increases in net revenues from outsourcing and consulting, fueled by strong demand for digital, cloud, and security-related services.
ACN's current ratio (a measure of liquidity) was 1.37 at the end of third-quarter fiscal 2023. This was higher than the prior quarter’s and the year-ago quarter’s reading of 1.27 each. The increasing current ratio bodes well for Accenture as it implies that the risk of default is less.
Some Concerning Points
Rising talent costs and competitive labor market are concerns for consulting providers like Accenture, as automation and AI advancements bring opportunities as well as uncertainties.
Zacks Rank and Key Picks
ACN currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services sector may consider the following better-ranked stocks.
Avis Budget (CAR - Free Report) : The Zacks Consensus Estimate for Avis Budget’s second-quarter 2023 revenues and earnings suggests declines of 1.6% and 39.5% year over year to $3.19 billion and $9.65 per share, respectively. It has an impressive earning surprise history. CAR beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 65.2%.
CAR has a VGM Score of A and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Maximus (MMS - Free Report) : The Zacks Consensus Estimate for Maximus’ second-quarter 2023 revenues and earnings indicates increases of 6.9% and 46.2% year over year to $1.2 billion and $1.14 per share, respectively. It has an impressive earning surprise history, beating the consensus mark in three instances and missing once, the average surprise being 9.6%.
MMS has a VGM Score of B and a Zacks Rank of 1.
Rollins (ROL - Free Report) : The Zacks Consensus Estimate of Rollins’ second-quarter 2023 revenues and earnings implies growth of 12.6% and 15% year over year to $803.6 million and 23 cents per share, respectively. It has an impressive earning surprise history, beating the consensus estimate in three of the trailing four quarters and missing once, the average surprise being 5.53%.
ROL currently carries a Zacks Rank of 2 (Buy) and a Growth Score of A.