Accenture Plc (ACN - Analyst Report) is set to report fiscal fourth-quarter 2016 results on Sep 29, 2016. Last quarter, the company posted a positive earnings surprise of 0.71%. Let us see how things are shaping up for this announcement.
Factors to Consider
Accenture delivered better-than-expected third quarter fiscal 2016 results. Revenues increased on a year-over-year basis, reflecting increased focus on the Consulting and Outsourcing business, new bookings and continuous return of shareholders’ value.
Accenture recently announced that it has entered into an agreement to acquire Kurt Salmon – a strategy consulting firm – that mainly focuses on the retail industry. Also, Accenture announced a definitive agreement to acquire a 47.4% stake in OCTO Technology.
We are encouraged by Accenture’s strategy of growing through acquisitions. These buyouts have enabled the company to foray into newer markets, diversify and broaden its product portfolio, and maintain a leading position. We believe that regular acquisitions will significantly contribute to the company's revenue stream.
Going forward, Accenture’s solid performance across insurance, banking and health care segments reflects strong demand for its services, which will boost its long-term growth prospects.
However, increasing competition from Cognizant Technology Solutions (CTSH - Analyst Report) and International Business Machines Corporation, a strained spending environment and Accenture’s broad European exposure may temper its growth to some extent.
ACCENTURE PLC Price and EPS Surprise
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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Earnings ESP for Accenture is +0.77%. This is because the Most Accurate estimate of $1.31 per share is higher than the Zacks Consensus Estimate of $1.30.
Zacks Rank #4 (Sell): We caution against stocks with a Zacks Rank #4 and 5 (Strong Sell) stocks going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies with a positive ESP and a favorable Zacks Rank that you may want to consider:
IHS Markit Ltd. (INFO - Snapshot Report) with Earnings ESP of +22.22% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Actuant Corporation (ATU - Analyst Report) with Earnings ESP of +3.45% and a Zacks Rank #3.
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