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Cloud Capabilities Aid Accenture (ACN), High Talent Costs Hurt
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Accenture plc (ACN - Free Report) is currently benefiting from its cloud capabilities as well as consulting businesses.
Accenture reported impressive first-quarter fiscal 2023 results, wherein both earnings & revenues beat the respective Zacks Consensus Estimate. Earnings of $3.08 per share surpassed the Zacks Consensus Estimate by 5.8% and improved 10.8% from the year-ago fiscal quarter’s reading. Revenues of $15.75 billion also beat the Zacks Consensus Estimate by 1.1% and increased 5.2% from the year-ago fiscal quarter’s tally on a reported basis and 15% in terms of local currency.
How Is Accenture Faring?
Accenture has been steadily gaining traction in its outsourcing as well as consulting businesses backed by high demand for services that can improve operating efficiencies and save costs.
On the outsourcing front, the company continues to see strong demand to assist clients with the operation and maintenance of digital-related services and cloud enablement. In fiscal 2021 , Accenture’s net revenues from outsourcing business increased 15% in U.S. dollars and 13% in local currency.
On the consulting front, the company experiences strong demand for digital, cloud and security-related services. In fiscal 2021 , Accenture’s net revenues from consulting business increased 13% in terms of U.S. dollars and 9% in local currency.
Accenture’s strategy of enhancing its cloud capabilities through acquisitions and partnerships is a step in the right direction. This is evident from a recent forecast by Gartner which reveals that the worldwide end-user spending on public cloud services is likely to grow 20.7% in 2023 to $591.8 billion. This is higher than the 18.8% growth forecast for 2022.
Therefore, considering the growing need for cloud-based applications and software, we expect Accenture’s investments in this space to propel long-term growth. The recent buyout of Fiftyfive5 is expected to strengthen Accenture’s capabilities across product innovation, commerce, marketing, sales and service, helping ACN to strengthen its foothold in the growing global customer analytics market.
A Key Risk
Higher talent costs due to a competitive talent market are affecting consulting services providers like Accenture. The industry is labor intensive and heavily dependent on foreign talent.
Some better-ranked stocks in the broader Zacks Business Services sector are Booz Allen Hamilton Holding Corporation (BAH - Free Report) and CRA International, Inc. (CRAI - Free Report) .
Booz Allen presently carries a Zacks Rank #2 (Buy). BAH has a long-term earnings growth expectation of 8.9%.
Booz Allen delivered a trailing four-quarter earnings surprise of 8.8%, on average.
CRA International carries a Zacks Rank of 2 at present. CRAI has a long-term earnings growth expectation of 14.3%.
CRA International delivered a trailing four-quarter earnings surprise of 25.7%, on average.
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Cloud Capabilities Aid Accenture (ACN), High Talent Costs Hurt
Accenture plc (ACN - Free Report) is currently benefiting from its cloud capabilities as well as consulting businesses.
Accenture reported impressive first-quarter fiscal 2023 results, wherein both earnings & revenues beat the respective Zacks Consensus Estimate. Earnings of $3.08 per share surpassed the Zacks Consensus Estimate by 5.8% and improved 10.8% from the year-ago fiscal quarter’s reading. Revenues of $15.75 billion also beat the Zacks Consensus Estimate by 1.1% and increased 5.2% from the year-ago fiscal quarter’s tally on a reported basis and 15% in terms of local currency.
How Is Accenture Faring?
Accenture has been steadily gaining traction in its outsourcing as well as consulting businesses backed by high demand for services that can improve operating efficiencies and save costs.
On the outsourcing front, the company continues to see strong demand to assist clients with the operation and maintenance of digital-related services and cloud enablement. In fiscal 2021 , Accenture’s net revenues from outsourcing business increased 15% in U.S. dollars and 13% in local currency.
On the consulting front, the company experiences strong demand for digital, cloud and security-related services. In fiscal 2021 , Accenture’s net revenues from consulting business increased 13% in terms of U.S. dollars and 9% in local currency.
Accenture’s strategy of enhancing its cloud capabilities through acquisitions and partnerships is a step in the right direction. This is evident from a recent forecast by Gartner which reveals that the worldwide end-user spending on public cloud services is likely to grow 20.7% in 2023 to $591.8 billion. This is higher than the 18.8% growth forecast for 2022.
Therefore, considering the growing need for cloud-based applications and software, we expect Accenture’s investments in this space to propel long-term growth. The recent buyout of Fiftyfive5 is expected to strengthen Accenture’s capabilities across product innovation, commerce, marketing, sales and service, helping ACN to strengthen its foothold in the growing global customer analytics market.
A Key Risk
Higher talent costs due to a competitive talent market are affecting consulting services providers like Accenture. The industry is labor intensive and heavily dependent on foreign talent.
Zacks Rank and Stocks to Consider
Accenture currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Booz Allen Hamilton Holding Corporation (BAH - Free Report) and CRA International, Inc. (CRAI - Free Report) .
Booz Allen presently carries a Zacks Rank #2 (Buy). BAH has a long-term earnings growth expectation of 8.9%.
Booz Allen delivered a trailing four-quarter earnings surprise of 8.8%, on average.
CRA International carries a Zacks Rank of 2 at present. CRAI has a long-term earnings growth expectation of 14.3%.
CRA International delivered a trailing four-quarter earnings surprise of 25.7%, on average.