Accenture Earnings Preview: What We’re Watching Today

Accenture (NYSE:ACN) is set to release its first quarter 2012 earnings Thursday after the market close. Given the company’s strong performance over the last few quarters, analysts are expecting solid results in the first quarter. The revenue is expected to come in at $6.85 billion, up 5.7% over the same period last year. The revenue guidance for fiscal 2012 is estimated to be $27.5 billion. ((Forbes Earnings Preview: Accenture, Forbes))

We currently have a $59.28 Trefis price estimate for Accenture, about 5% above the market.

See our full analysis on Accenture

Strong Revenue and Profit Growth Expected to Continue

Accenture is witnessing strong demand for its core management consulting, technology consulting, and outsourcing services as businesses around the world look to keep up with the dynamic markets and latest technologies of today. The firm has achieved double digit revenue for the past four quarters (averaging 18.4%) and its net income has been increasing for three consecutive quarters now.

With record new bookings of $28.8 billion in fiscal 2011, and particularly in Q4 at $8.4 billion, we expect the firm’s revenue flow to remain strong in Q1 2012 as well as rest of the fiscal.

In addition to revenue growth, Accenture has focused on cutting costs in recent times and was able to reduce its selling and marketing (S&M) as well as general and administrative (G&A) costs significantly in fiscal 2011. As a result, the company’s operating margin was down 10 basis points during fiscal 2011 despite its decreased gross margin.

We estimate the technology consulting and outsourcing major will be able to maintain relatively stable margins going forward. However, we will keep an eye out for any trends in terms of profitability.

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