Why Has Accenture Stock More Than Doubled Since Late 2018?

-21.70%
Downside
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Market
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Trefis
ACN: Accenture logo
ACN
Accenture

Accenture (NYSE: ACN) stock price jumped more than 2x from $141 in 2018 end to $326 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company witnessed a steady rise in revenue over this period, and revenue per share has increased, despite a roughly unchanged outstanding share count.

In our interactive dashboard, Why Accenture Stock Moved: ACN Stock Has Gained 131% Since 2018, we break down the factors behind this move.

(A) ACN’s Total Revenue has grown 38% from $41 billion in 2018 to $56.7 billion on an LTM basis

  • ACN’s total revenue has seen a steady rise over the past few years, with a gradual increase from $41 billion in FY ’18 to $50.5 billion in FY ’21, and currently stands even higher at $56.7 billion. (ACN’s fiscal year ends in August)
  • The company is a leading multinational professional services company, specializing in information technology services and consulting.
  • As of FY ’21, sales from North America make up 47% of the company’s sales, standing at $23.7 billion, up from $20 billion in FY ’19, a jump of almost 20% in just two years.
  • For details about ACN revenues and comparison to peers, see Accenture (ACN) Revenue Comparison
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(B) Revenue per share (RPS) increased 37% from $65.23 in 2018 to $89.47 currently

  • ACN revenue rose from $41 billion in 2018 to $56.7 billion currently, while the outstanding share count increased from 628.5 million in 2018 to 633.7 million currently.
  • Due to this, RPS has risen from $65.23 in FY ’18 to $89.47 currently.

(C) Price-To-Sales (P/S) multiple for ACN rose strongly from 2.3x in 2018 to 5.4x by 2021 end, but has pulled back to 3.6x currently, still more than 1.5x higher than its 2018 level

  • Due to ACN’s strong performance between 2018-end to 2021, its P/S multiple rose steadily from 2.3x in 2018 to as high as 5.4x in 2021, on the back of rising investor expectations surrounding a continued rise in demand for the company’s services.
  • However, despite the recent jump in sales, current geopolitical tensions have led to increased uncertainty in the broader markets, and the P/S multiple has pulled back, currently standing at around 3.6x.
  • For additional details about the company stock returns and comparison to peers, see Accenture (ACN) Stock Return Comparison.

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 Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ACN Return -5% -23% 174%
 S&P 500 Return -3% -8% 97%
 Trefis Multi-Strategy Portfolio -1% -8% 261%

[1] Month-to-date and year-to-date as of 4/14/2022
[2] Cumulative total returns since the end of 2016

 

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