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Accenture (ACN) Benefits From Strategic Acquisition Over Time
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Accenture (ACN - Free Report) reported better-than-expected third-quarter fiscal 2023 results, wherein both earnings & revenues increased year over year. Adjusted earnings (excluding 4 cents from non-recurring items) of $3.19 per share surpassed the Zacks Consensus Estimate by 7.7% and improved 14.3% from the year-ago fiscal quarter’s reading. The bottom line benefited from higher revenues, streamlined operations and optimization of office space to reduce costs.
Revenues of $16.6 billion also beat the consensus estimate by a slight margin and increased 2.5% from the year-ago fiscal quarter’s tally on a reported basis and 9% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
ACN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Accenture's outsourcing and consulting businesses are thriving due to the rising demand for cost-effective and efficiency-improving services. In fiscal 2022, outsourcing revenues grew 19% in USD and 22% in local currency, while consulting revenues saw 25% USD and 29% local currency growth. Consulting revenues are anticipated to rise 4-5% year-over-year in fiscal 2023 while outsourcing revenues are expected to grow 16% in local currency.
Acquisitions have played a pivotal role in Accenture's growth strategy, allowing the company to enter new markets, diversify its product offerings, and maintain its position as a leader in the industry. In the fiscal year 2022, Accenture made strategic investments of $3.4 billion through 38 acquisitions. In fiscal year 2021, the company allocated $4.2 billion toward 46 acquisitions while in fiscal 2020, it dedicated over $1.5 billion to 34 acquisitions. These acquisitions are anticipated to continue being a significant contributor to Accenture's revenue stream.
The recent acquisition of ATI Solutions Group is aimed at bolstering Accenture's capabilities in Australia, where there is a high demand for specialized digital and industrial talent. The acquisition of Anser Advisory is expected to enhance Accenture's ability to assist clients in efficiently completing large and long-term infrastructure projects. Additionally, the purchase of Strongbow Consultancy is set to modernize the IT infrastructure of the companies.
Accenture's current ratio (a measure of liquidity) stood at 1.37 at the end of third-quarter fiscal 2023, higher than 1.27 recorded at the end of the prior quarter. The gradually increasing current ratio bodes well for Accenture as it implies that lesser risk of default.
Key Risk
Accenture's frequent acquisitions, while enhancing its revenue potential, business diversity, and profitability, also introduce integration challenges. Additionally, the constant acquisition activity can divert management's attention, potentially affecting organic growth in the future.
Zacks Rank and Stocks to Consider
ACN carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the broader Business Service sector, which may be considered by investors:
Verisk Analytics(VRSK - Free Report) has beaten the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently holds a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data(ADP - Free Report) currently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge(BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.
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Accenture (ACN) Benefits From Strategic Acquisition Over Time
Accenture (ACN - Free Report) reported better-than-expected third-quarter fiscal 2023 results, wherein both earnings & revenues increased year over year. Adjusted earnings (excluding 4 cents from non-recurring items) of $3.19 per share surpassed the Zacks Consensus Estimate by 7.7% and improved 14.3% from the year-ago fiscal quarter’s reading. The bottom line benefited from higher revenues, streamlined operations and optimization of office space to reduce costs.
Revenues of $16.6 billion also beat the consensus estimate by a slight margin and increased 2.5% from the year-ago fiscal quarter’s tally on a reported basis and 9% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
ACN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Accenture PLC Revenue (TTM)
Accenture PLC revenue-ttm | Accenture PLC Quote
Factors Boding Well
Accenture's outsourcing and consulting businesses are thriving due to the rising demand for cost-effective and efficiency-improving services. In fiscal 2022, outsourcing revenues grew 19% in USD and 22% in local currency, while consulting revenues saw 25% USD and 29% local currency growth. Consulting revenues are anticipated to rise 4-5% year-over-year in fiscal 2023 while outsourcing revenues are expected to grow 16% in local currency.
Acquisitions have played a pivotal role in Accenture's growth strategy, allowing the company to enter new markets, diversify its product offerings, and maintain its position as a leader in the industry. In the fiscal year 2022, Accenture made strategic investments of $3.4 billion through 38 acquisitions. In fiscal year 2021, the company allocated $4.2 billion toward 46 acquisitions while in fiscal 2020, it dedicated over $1.5 billion to 34 acquisitions. These acquisitions are anticipated to continue being a significant contributor to Accenture's revenue stream.
The recent acquisition of ATI Solutions Group is aimed at bolstering Accenture's capabilities in Australia, where there is a high demand for specialized digital and industrial talent. The acquisition of Anser Advisory is expected to enhance Accenture's ability to assist clients in efficiently completing large and long-term infrastructure projects. Additionally, the purchase of Strongbow Consultancy is set to modernize the IT infrastructure of the companies.
Accenture's current ratio (a measure of liquidity) stood at 1.37 at the end of third-quarter fiscal 2023, higher than 1.27 recorded at the end of the prior quarter. The gradually increasing current ratio bodes well for Accenture as it implies that lesser risk of default.
Key Risk
Accenture's frequent acquisitions, while enhancing its revenue potential, business diversity, and profitability, also introduce integration challenges. Additionally, the constant acquisition activity can divert management's attention, potentially affecting organic growth in the future.
Zacks Rank and Stocks to Consider
ACN carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the broader Business Service sector, which may be considered by investors:
Verisk Analytics(VRSK - Free Report) has beaten the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently holds a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data(ADP - Free Report) currently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge(BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.