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Accenture (ACN) Q2 Earnings Surpass Estimates, FY19 View Up
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Accenture plc (ACN - Free Report) reported impressive second-quarter fiscal 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
The stock gained significantly in the pre-market trading, courtesy of the company’s bullish guidance for fiscal 2019. Management raised anticipated EPS range to $7.18-$7.32 from 7.01-$7.25 anticipated earlier. The mid-point of the raised guidance ($7.25) is above the Zacks Consensus Estimate of $7.21 for the period. Revenues are expected to register 6.5-8.5% growth, in terms of local currency, compared with 6-8% growth rate as expected previously.
Earnings of $1.73 per share surpassed the consensus estimate by 16 cents and came ahead of the year-ago figure by 15 cents. The bottom line benefited from higher revenues and operating results, lower non-operating expense and lower share count. These were, however, partially offset by a higher effective tax rate.
Net revenues of $10.45 billion outpaced the consensus mark by $167.4 million and increased 5% year over year on a reported basis and 9% in terms of local currency. Net revenues came above the management’s guided range of $10.10-$10.40 billion.
Over the past year, shares of Accenture have gained 13% compared with 15% rise of the industry it belongs and 8.1% increase of the Zacks S&P 500 composite.
Revenues in Detail
On the basis of type of work, Consulting revenues (55% of net revenues) of $5.79 billion increased 6% year over year on a reported basis and 9% in terms of local currency. Outsourcing revenues (45%) of $4.67 billion increased 5% year over year on a reported basis and 9% in terms of local currency.
Among the operating segments, Communications, Media & Technology revenues (20% of net revenues) of $2.15 billion increased 8% year over year on a reported basis and 12% in terms of local currency. Financial Services revenues (20%) of $2.05 billion decreased 2% year over year on a reported basis but improved 2% in terms of local currency. Health & Public Service revenues (16%) of $1.71 billion increased 1% year over year on a reported basis and 3% in terms of local currency. Products revenues (28%) of $2.91 billion increased 6% year over year on a reported basis and 10% in local currency. Resources revenues (16%) of $1.64 billion increased 17% year over year on a reported basis and 22% in terms of local currency.
Geographically, revenues from North Americas (45% of net revenues) of $4.75 billion increased 8% year over year on a reported basis as well as in terms of local currency. Revenues from Europe (35%) of $3.63 billion increased 1% year over year on a reported basis and 7% in terms of local currency. Revenues from Growth Markets (20%) of $2.07 billion increased 9% year over year on a reported basis and 16% in terms of local currency.
Accenture reported new bookings worth $11.8 billion. Consulting bookings and Outsourcing bookings totaled $6.7 billion and $5.1 billion, respectively.
Operating Results
Gross margin (gross profit as a percentage of net revenues) for the second quarter of fiscal 2019 increased 30 basis points (bps) to 29.2%. Operating income was $1.39 billion, up 7% year over year. Operating margin for the reported quarter expanded 20 bps to 13.3%.
Accenture exited second-quarter fiscal 2019 with total cash and cash equivalents balance of $4.46 billion compared with $4.36 billion at the end of the prior quarter. Long-term debt was $19.8 million compared with $19.9 million at the end of the prior quarter.
Cash provided by operating activities crossed $1.36 billion in the reported quarter. Free cash flow came in at $1.22 billion.
Dividend Payment
Accenture declared a semi-annual cash dividend of $1.46 per share for its shareholders of record at the close of business on Apr 11, 2019. The dividend will be paid on May 15, 2019.
Combined with the semi-annual cash dividend of $1.46 per share paid on Nov 15, 2018, the total cash dividend payment for the fiscal year will be $2.92 per share.
The company plans to pay dividends on a quarterly basis from the first quarter of fiscal 2020.
Share Repurchases
In line with the policy of returning cash to its shareholders, Accenture repurchased 6.7 million shares for $1.01 billion in the fiscal second quarter. The company had approximately 639 million total shares outstanding as of Feb 28, 2019.
Guidance
Third-Quarter Fiscal 2019
For third-quarter fiscal 2019, Accenture expects revenues to be in the range of $10.80- $11.10 billion, which reflects 5.5-8.5% growth in local currency. The assumption is inclusive of a negative foreign-exchange impact of 4.5%. Notably, the Zacks Consensus Estimate of $11.05 billion lies within the current guided range.
Fiscal 2019
Accenture updated its guidance for fiscal 2019. The company continues to expect negative foreign-exchange impact of 3% on its results in U.S. dollars.
Operating margin for the fiscal year is still expected in the range of 14.5-14.7%, indicating an expansion of 10-30 basis points from fiscal 2018.
Operating cash flow is anticipated in the range of $5.85-$6.25 billion compared with $5.75-$6.15 billion projected earlier. Free cash flow is expected in the $5.2-$5.6 billion band compared with the previously guided range of $5.1-$5.5 billion.
Annual effective tax rate is expected to be 22.5-23.5% compared with 23-25% anticipated earlier.
Investors interested in the broader Zacks Business Services sector are keenly awaiting first-quarter 2019 earnings reports from key players like Republic Services (RSG - Free Report) , Waste Management (WM - Free Report) and Waste Connections (WCN - Free Report) . While Waste Connections will release earnings on Apr 24, Republic Services and Waste Management will report on Apr 25.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Accenture (ACN) Q2 Earnings Surpass Estimates, FY19 View Up
Accenture plc (ACN - Free Report) reported impressive second-quarter fiscal 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
The stock gained significantly in the pre-market trading, courtesy of the company’s bullish guidance for fiscal 2019. Management raised anticipated EPS range to $7.18-$7.32 from 7.01-$7.25 anticipated earlier. The mid-point of the raised guidance ($7.25) is above the Zacks Consensus Estimate of $7.21 for the period. Revenues are expected to register 6.5-8.5% growth, in terms of local currency, compared with 6-8% growth rate as expected previously.
Earnings of $1.73 per share surpassed the consensus estimate by 16 cents and came ahead of the year-ago figure by 15 cents. The bottom line benefited from higher revenues and operating results, lower non-operating expense and lower share count. These were, however, partially offset by a higher effective tax rate.
Net revenues of $10.45 billion outpaced the consensus mark by $167.4 million and increased 5% year over year on a reported basis and 9% in terms of local currency. Net revenues came above the management’s guided range of $10.10-$10.40 billion.
Over the past year, shares of Accenture have gained 13% compared with 15% rise of the industry it belongs and 8.1% increase of the Zacks S&P 500 composite.
Revenues in Detail
On the basis of type of work, Consulting revenues (55% of net revenues) of $5.79 billion increased 6% year over year on a reported basis and 9% in terms of local currency. Outsourcing revenues (45%) of $4.67 billion increased 5% year over year on a reported basis and 9% in terms of local currency.
Among the operating segments, Communications, Media & Technology revenues (20% of net revenues) of $2.15 billion increased 8% year over year on a reported basis and 12% in terms of local currency. Financial Services revenues (20%) of $2.05 billion decreased 2% year over year on a reported basis but improved 2% in terms of local currency. Health & Public Service revenues (16%) of $1.71 billion increased 1% year over year on a reported basis and 3% in terms of local currency. Products revenues (28%) of $2.91 billion increased 6% year over year on a reported basis and 10% in local currency. Resources revenues (16%) of $1.64 billion increased 17% year over year on a reported basis and 22% in terms of local currency.
Geographically, revenues from North Americas (45% of net revenues) of $4.75 billion increased 8% year over year on a reported basis as well as in terms of local currency. Revenues from Europe (35%) of $3.63 billion increased 1% year over year on a reported basis and 7% in terms of local currency. Revenues from Growth Markets (20%) of $2.07 billion increased 9% year over year on a reported basis and 16% in terms of local currency.
Accenture PLC Revenue (TTM)
Accenture PLC Revenue (TTM) | Accenture PLC Quote
Booking Trends
Accenture reported new bookings worth $11.8 billion. Consulting bookings and Outsourcing bookings totaled $6.7 billion and $5.1 billion, respectively.
Operating Results
Gross margin (gross profit as a percentage of net revenues) for the second quarter of fiscal 2019 increased 30 basis points (bps) to 29.2%. Operating income was $1.39 billion, up 7% year over year. Operating margin for the reported quarter expanded 20 bps to 13.3%.
Accenture PLC Price, Consensus and EPS Surprise
Accenture PLC Price, Consensus and EPS Surprise | Accenture PLC Quote
Balance Sheet & Cash Flow
Accenture exited second-quarter fiscal 2019 with total cash and cash equivalents balance of $4.46 billion compared with $4.36 billion at the end of the prior quarter. Long-term debt was $19.8 million compared with $19.9 million at the end of the prior quarter.
Cash provided by operating activities crossed $1.36 billion in the reported quarter. Free cash flow came in at $1.22 billion.
Dividend Payment
Accenture declared a semi-annual cash dividend of $1.46 per share for its shareholders of record at the close of business on Apr 11, 2019. The dividend will be paid on May 15, 2019.
Combined with the semi-annual cash dividend of $1.46 per share paid on Nov 15, 2018, the total cash dividend payment for the fiscal year will be $2.92 per share.
The company plans to pay dividends on a quarterly basis from the first quarter of fiscal 2020.
Share Repurchases
In line with the policy of returning cash to its shareholders, Accenture repurchased 6.7 million shares for $1.01 billion in the fiscal second quarter. The company had approximately 639 million total shares outstanding as of Feb 28, 2019.
Guidance
Third-Quarter Fiscal 2019
For third-quarter fiscal 2019, Accenture expects revenues to be in the range of $10.80- $11.10 billion, which reflects 5.5-8.5% growth in local currency. The assumption is inclusive of a negative foreign-exchange impact of 4.5%. Notably, the Zacks Consensus Estimate of $11.05 billion lies within the current guided range.
Fiscal 2019
Accenture updated its guidance for fiscal 2019. The company continues to expect negative foreign-exchange impact of 3% on its results in U.S. dollars.
Operating margin for the fiscal year is still expected in the range of 14.5-14.7%, indicating an expansion of 10-30 basis points from fiscal 2018.
Operating cash flow is anticipated in the range of $5.85-$6.25 billion compared with $5.75-$6.15 billion projected earlier. Free cash flow is expected in the $5.2-$5.6 billion band compared with the previously guided range of $5.1-$5.5 billion.
Annual effective tax rate is expected to be 22.5-23.5% compared with 23-25% anticipated earlier.
Zacks Rank & Upcoming Releases
Accenture currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Zacks Business Services sector are keenly awaiting first-quarter 2019 earnings reports from key players like Republic Services (RSG - Free Report) , Waste Management (WM - Free Report) and Waste Connections (WCN - Free Report) . While Waste Connections will release earnings on Apr 24, Republic Services and Waste Management will report on Apr 25.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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