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Accenture (ACN) Up 4.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Accenture (ACN - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Accenture due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Accenture Beats Q1 Earnings, Revenues Missed
Accenture plc reported mixed first-quarter fiscal 2024 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the mark.
Adjusted earnings (excluding 17 cents from non-recurring items) of $3.27 per share surpassed the Zacks Consensus Estimate by 4.1% and improved 6% 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 $16.22 billion missed the consensus estimate by a slight margin but increased 3% from the year-ago fiscal quarter’s tally on a reported basis and 1% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
Revenues in Detail
Based on the type of work, Consulting revenues of $8.46 billion matched the year-ago quarter’s reading on a reported basis and declined 2% in terms of local currency. The figure missed our estimate by a slight margin. Managed Services revenues of $7.77 billion increased 6% from the year-ago quarter’s number on a reported basis and 5% in terms of local currency, beating our estimate by a slight margin.
Segment-wise, Communications, Media & Technology revenues of $2.67 billion missed our estimate by 7.9% and decreased 10% on a reported basis and in 11% terms of local currency. Financial Services revenues of $3.03 billion increased 2% from the year-ago fiscal quarter’s reading on a reported basis but lagged our estimated $3.07 billion.
Health & Public Service revenues of $3.38 billion increased 13% from the year-ago fiscal quarter’s reading on a reported basis and 12% on a local currency basis. The figure surpassed our estimate by 6.6%. Products revenues of $4.86 billion grew 4% from the year-ago fiscal quarter’s number in terms of U.S. dollars and 1% in local currency basis, beating our estimated $4.83 billion. Resources revenues of $2.28 billion increased 7% from the year-ago fiscal quarter’s level on a reported and 6% on a local currency basis, surpassing our estimate by 1.8%.
Geographically, revenues of $7.56 billion from North America decreased 1% in terms of local currency from the year-ago fiscal quarter’s figure. Revenues of $5.8 billion from Europe increased 9% on a reported basis and 2% in terms of local currency. Revenues of $2.86 billion from Growth Markets increased 2% year over year on a reported basis and 5% in terms of local currency.
Booking Trends
Accenture reported new bookings worth $18.45 billion in the fiscal 2024 first quarter, up 14% from the year-ago fiscal quarter’s reading on a reported basis and 12% in terms of local currency. Consulting bookings totaled $8.62 billion and Managed Services bookings summed $9.83 billion.
Operating Results
The gross margin (gross profit as a percentage of net revenues) for first-quarter fiscal 2024 was 33.6%, up 70 basis points from the figure reported in the year-ago fiscal period. Adjusted operating income was $2.7 billion, up 4.2% from the year-ago figure. The operating margin of 16.7% expanded 20 basis points from the year-ago fiscal quarter.
Balance Sheet & Cash Flow
Accenture exited first-quarter fiscal 2024 with cash and cash equivalents of $7.14 billion compared with $9 billion at the end of the prior fiscal quarter. Cash provided by operating activities was $499 million for the reported fiscal quarter while capital expenditure was $69 million. Free cash flow was $430 million.
Accenture repurchased 3.8 million shares for a total of $1.2 billion, including approximately 3.4 million shares repurchased in the open market. The company paid a dividend of $810 million in the first quarter of fiscal 2024.
Guidance
The company expects revenues for the second quarter of fiscal 2024 to be in the range of $15.4 billion and $16 billion. Accenture expects fiscal 2024 adjusted earnings per share (EPS) to be in the range of $11.97-$12.32.
Accenture expects its adjusted operating margin for the full fiscal year to be 15.5-15.7%.
Operating cash flow is anticipated in the range of $9.3-$9.9 billion. Free cash flow is expected between $8.7 billion and $9.3 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Accenture has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Accenture has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Accenture (ACN) Up 4.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Accenture (ACN - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Accenture due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Accenture Beats Q1 Earnings, Revenues Missed
Accenture plc reported mixed first-quarter fiscal 2024 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the mark.
Adjusted earnings (excluding 17 cents from non-recurring items) of $3.27 per share surpassed the Zacks Consensus Estimate by 4.1% and improved 6% 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 $16.22 billion missed the consensus estimate by a slight margin but increased 3% from the year-ago fiscal quarter’s tally on a reported basis and 1% in terms of local currency. Revenues benefited from improved segmental results except in Communications, Media & Technology.
Revenues in Detail
Based on the type of work, Consulting revenues of $8.46 billion matched the year-ago quarter’s reading on a reported basis and declined 2% in terms of local currency. The figure missed our estimate by a slight margin. Managed Services revenues of $7.77 billion increased 6% from the year-ago quarter’s number on a reported basis and 5% in terms of local currency, beating our estimate by a slight margin.
Segment-wise, Communications, Media & Technology revenues of $2.67 billion missed our estimate by 7.9% and decreased 10% on a reported basis and in 11% terms of local currency. Financial Services revenues of $3.03 billion increased 2% from the year-ago fiscal quarter’s reading on a reported basis but lagged our estimated $3.07 billion.
Health & Public Service revenues of $3.38 billion increased 13% from the year-ago fiscal quarter’s reading on a reported basis and 12% on a local currency basis. The figure surpassed our estimate by 6.6%. Products revenues of $4.86 billion grew 4% from the year-ago fiscal quarter’s number in terms of U.S. dollars and 1% in local currency basis, beating our estimated $4.83 billion. Resources revenues of $2.28 billion increased 7% from the year-ago fiscal quarter’s level on a reported and 6% on a local currency basis, surpassing our estimate by 1.8%.
Geographically, revenues of $7.56 billion from North America decreased 1% in terms of local currency from the year-ago fiscal quarter’s figure. Revenues of $5.8 billion from Europe increased 9% on a reported basis and 2% in terms of local currency. Revenues of $2.86 billion from Growth Markets increased 2% year over year on a reported basis and 5% in terms of local currency.
Booking Trends
Accenture reported new bookings worth $18.45 billion in the fiscal 2024 first quarter, up 14% from the year-ago fiscal quarter’s reading on a reported basis and 12% in terms of local currency. Consulting bookings totaled $8.62 billion and Managed Services bookings summed $9.83 billion.
Operating Results
The gross margin (gross profit as a percentage of net revenues) for first-quarter fiscal 2024 was 33.6%, up 70 basis points from the figure reported in the year-ago fiscal period. Adjusted operating income was $2.7 billion, up 4.2% from the year-ago figure. The operating margin of 16.7% expanded 20 basis points from the year-ago fiscal quarter.
Balance Sheet & Cash Flow
Accenture exited first-quarter fiscal 2024 with cash and cash equivalents of $7.14 billion compared with $9 billion at the end of the prior fiscal quarter. Cash provided by operating activities was $499 million for the reported fiscal quarter while capital expenditure was $69 million. Free cash flow was $430 million.
Accenture repurchased 3.8 million shares for a total of $1.2 billion, including approximately 3.4 million shares repurchased in the open market. The company paid a dividend of $810 million in the first quarter of fiscal 2024.
Guidance
The company expects revenues for the second quarter of fiscal 2024 to be in the range of $15.4 billion and $16 billion. Accenture expects fiscal 2024 adjusted earnings per share (EPS) to be in the range of $11.97-$12.32.
Accenture expects its adjusted operating margin for the full fiscal year to be 15.5-15.7%.
Operating cash flow is anticipated in the range of $9.3-$9.9 billion. Free cash flow is expected between $8.7 billion and $9.3 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Accenture has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Accenture has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.