What To Expect From Accenture After Its Q2 Earnings Beat?

by Trefis Team
-5.13%
Downside
156
Market
148
Trefis
ACN
Accenture
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Accenture (NYSE:ACN) announced its fiscal Q2 results on March 22, reporting solid growth in revenues despite intense and growing competition in both consulting and outsourcing industries. Accenture reported a 15% increase in net revenues to just over $10 billion for the quarter. Consulting revenues were up 17% to $5.2 billion while outsourcing revenues rose 13% on a y-o-y basis to $4.4 billion. The company reported a healthy growth across sectors including communications, media & technology (CMT), financial services, products and resources segments. Limited increase in operating expenses led net income and earnings per share to increase 17-18% to $1.1 billion and $1.58, respectively. This trend is likely to continue through the February ended quarter as well. As a result, the company expects its revenues to grow by 6-8% through fiscal 2018.

We have a $149 price estimate for Accenture’s stock, which is slightly lower than the current market price.

Solid Q3 Guidance

Accenture’s management has given positive guidance for the second fiscal quarter, with combined consulting and outsourcing revenues expected to increase 6-8% on a year-on-year basis to $10 billion. The key driver of the revenue growth in recent years has been strong double-digit growth in bookings for digital-related strategy and consulting services. Accenture has been able to strategically position itself in these domains through acquisitions over the past few years. These acquisitions have not only diversified the company’s geographical footprint but also augmented its portfolio of services in the Cloud, Internet of Things, and cyber security domains. In addition to revenue growth, Accenture’s operating profit margin could be slightly higher on a y-o-y basis in the quarter.

We have summarized our Q3 FY’18 expectations for Accenture, based on the company’s guidance and our own estimates, on our interactive dashboard platform. If you think differently, you can change expected segment revenue, operating margin, and net income margin for Accenture to gauge how these changes will impact its expected EPS.

See our complete analysis for Accenture

 

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