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Will Accenture (ACN) Disappoint This Earnings Season?

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Accenture plc (ACN - Free Report) is expected to report its second quarter fiscal 2014 results on March 27. In the last quarter, it delivered +5.50% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider

Accenture’s expansive client base is expected to help in bookings growth. Also, solid performance across insurance, banking and healthcare segments reflects strong demand for its services, boosting the company’s prospects.

Moreover, increasing focus on the outsourcing business, operating cost optimization, new bookings and continued return to shareholders are expected to remain the quarter’s positives. Recent collaborations with SAP AG (SAP - Free Report) and IPSoft will diversify Accenture’s offerings and cater to the growing demands, which in turn will help the company gain competitive advantage.

However, increasing competition from Cognizant Technology Solutions and International Business Machines Corp (IBM - Free Report) , constricted spending environment and Accenture’s broad European exposure may temper its growth prospects to some extent.

Earnings Whispers?

Our proven model does not conclusively show that Accenture is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.04. Thus, the ESP is 0.00%.

Zacks Rank: Accenture’s Zacks Rank #2 (Buy) when combined with a 0.00% ESP makes surprise predictions difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Another company that investors may want to consider as our model shows that it has the right combination of elements to post an earnings beat is:

Carnival Corp.(CCL - Free Report) , Earnings ESP of +25.0 % and a Zacks Rank #2.

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