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ACN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
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 year-ago 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.
Accenture's growth strategy heavily involves acquisitions, facilitating market entry, portfolio diversification, and sustained leadership. The company spent $3.4 billion on 38 acquisitions in fiscal 2022, $4.2 billion on 46 acquisitions in fiscal 2021, and more than $1.5 billion on 34 acquisitions in fiscal 2020. Acquisitions are anticipated to continually bolster revenues. The recent Anser Advisory acquisition enhances project efficiency, while Strongbow Consultancy acquisition modernizes IT.
Accenture is gaining ground in outsourcing and consulting due to high demand for cost-saving and efficiency-enhancing services. In outsourcing, the company assists with digital services and cloud support, with net revenues up 19% (USD) and 22% (local currency) in fiscal 2022. In consulting, demand is strong for digital, cloud, and security services, with net revenues up 25% (USD) and 29% (local currency).
Accenture's strategy to enhance cloud capabilities via acquisitions and partnerships is validated by Gartner's (IT - Free Report) projection of 20.7% growth in 2023's global spending on public cloud services. With rising demand for cloud-based solutions, Accenture's investments are poised for lasting expansion. Asserting its Salesforce (CRM - Free Report) expertise, Accenture leads in Salesforce implementation globally with 11,000+ professionals and strategic acquisitions. As Salesforce is a major cloud software provider, reinforcing capabilities in delivering Salesforce services is vital. Accenture's cloud-focused approach and Salesforce investments position the companies well for enduring growth in the evolving digital landscape.
Accenture's current ratio (a measure of liquidity) stood at 1.37 at the end of third-quarter fiscal 2023, higher than the 1.27 recorded at the end of the prior quarter. Increasing current ratio bodes well for Accenture as it implies lesser risk of default.
Factors Against
Client ties and contract count shape Accenture's shares and revenues. Intense rivalry from Genpact, Cognizant, Infosys, especially in resurging European markets, raises pricing stress.
Increased reliance on acquisitions exposes the company to integration risk. Frequent acquisitions might affect the management’s focus and adversely impact organic growth.
Zacks Rank and Stocks to Consider
ACN currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following stocks:
Earnings for 2023 are expected to grow 8.8%, whereas revenues are anticipated go up 10.8% year over year. ICFI has an impressive earnings surprise of 6.95% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
Gartner currently carries a Zacks Rank of 3. Earnings for 2023 are expected to decline 9.3% from the year-ago reported figure while revenues are expected to grow 7.3% year over year. It has beaten the Zacks Consensus Estimate in all four trailing quarters with an average surprise of 32.6%.
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High Demand and Acquisitions Bode Well for Accenture (ACN)
Accenture plc (ACN - Free Report) has grown 14.5% in the year-to-date period compared with the Consulting Services market's rise of 15% and 7.9% growth of Business Services sector.
ACN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
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 year-ago 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.
Accenture PLC Price and Consensus
Accenture PLC price-consensus-chart | Accenture PLC Quote
Factors in Favor
Accenture's growth strategy heavily involves acquisitions, facilitating market entry, portfolio diversification, and sustained leadership. The company spent $3.4 billion on 38 acquisitions in fiscal 2022, $4.2 billion on 46 acquisitions in fiscal 2021, and more than $1.5 billion on 34 acquisitions in fiscal 2020. Acquisitions are anticipated to continually bolster revenues. The recent Anser Advisory acquisition enhances project efficiency, while Strongbow Consultancy acquisition modernizes IT.
Accenture is gaining ground in outsourcing and consulting due to high demand for cost-saving and efficiency-enhancing services. In outsourcing, the company assists with digital services and cloud support, with net revenues up 19% (USD) and 22% (local currency) in fiscal 2022. In consulting, demand is strong for digital, cloud, and security services, with net revenues up 25% (USD) and 29% (local currency).
Accenture's strategy to enhance cloud capabilities via acquisitions and partnerships is validated by Gartner's (IT - Free Report) projection of 20.7% growth in 2023's global spending on public cloud services. With rising demand for cloud-based solutions, Accenture's investments are poised for lasting expansion. Asserting its Salesforce (CRM - Free Report) expertise, Accenture leads in Salesforce implementation globally with 11,000+ professionals and strategic acquisitions. As Salesforce is a major cloud software provider, reinforcing capabilities in delivering Salesforce services is vital. Accenture's cloud-focused approach and Salesforce investments position the companies well for enduring growth in the evolving digital landscape.
Accenture's current ratio (a measure of liquidity) stood at 1.37 at the end of third-quarter fiscal 2023, higher than the 1.27 recorded at the end of the prior quarter. Increasing current ratio bodes well for Accenture as it implies lesser risk of default.
Factors Against
Client ties and contract count shape Accenture's shares and revenues. Intense rivalry from Genpact, Cognizant, Infosys, especially in resurging European markets, raises pricing stress.
Increased reliance on acquisitions exposes the company to integration risk. Frequent acquisitions might affect the management’s focus and adversely impact organic growth.
Zacks Rank and Stocks to Consider
ACN currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following stocks:
ICF International (ICFI - Free Report) currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings for 2023 are expected to grow 8.8%, whereas revenues are anticipated go up 10.8% year over year. ICFI has an impressive earnings surprise of 6.95% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
Gartner currently carries a Zacks Rank of 3. Earnings for 2023 are expected to decline 9.3% from the year-ago reported figure while revenues are expected to grow 7.3% year over year. It has beaten the Zacks Consensus Estimate in all four trailing quarters with an average surprise of 32.6%.