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Accenture's (ACN) Q3 Earnings to Reflect Top-Line Strength

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Shares of Accenture plc (ACN - Free Report) have gained 27.8% over the past year, significantly outperforming the S&P 500’s rally of 14.4%. The company is set to report third-quarter fiscal 2018 results on Jun 28 before the bell.

We expect Accenture to perform well in the to-be-reported quarter backed by strength across all the segments and solid bookings.

Here are the expectations in detail.

Strength Across Segments to Drive Revenues

The Zacks Consensus Estimate for the Communications, Media & Technology segment’s revenues is pegged at $1.94 billion. This projected figure reflects year-over-year growth of 10.4% when compared with the year-ago quarter’s actual figure. The expected improvement is likely to be driven by growth in software and platforms in communications and media. In second-quarter fiscal 2018, revenues at this segment increased 14% on a year-over-year basis.

For Financial Services segment’s revenues, the consensus mark stands at $2.15 billion, mirroring a year-over-year improvement of 15.3%. This upside is expected to be driven by strength across both Banking & Capital Markets and Insurance industry groups.  Financial Services revenues rose 14% year over year in the second quarter of fiscal 2018.

For Health & Public Service segment revenues, the consensus mark stands at $1.71 billion, indicating year-over-year growth of 10.2%. This growth is likely to be driven by both Health and Public Service industry groups. The segment’s revenues increased 9% year over year in the second quarter of fiscal 2018.

The Products segment should also deliver impressive results, courtesy of strength across Industrial, Consumer Goods, Retail and Travel services industry groups. The Zacks Consensus Estimate for revenues is pegged at $2.80 billion, reflecting a year-over-year increase of 15.3%. The segment witnessed a 16% year-over-year growth in the second quarter of fiscal 2018.

Lastly, the Zacks Consensus Estimate for the Resources segment revenues stands at $1.40 billion, mirroring growth of 12.4% year over year. Strength across Chemicals & Natural Resources and Energy industry groups are expected to drive growth at this segment.

Strength across all segments will contribute significantly toward year-over-year growth of Accenture’s total revenues, the Zacks Consensus Estimate for which is currently pegged at $10.1 billion, representing an increase of 13% year over year. In second-quarter fiscal 2018, total revenues of $9.59 billion grew 15% year over year.

Accenture PLC Revenue (TTM)

Booking Trends Encouraging

The Zacks Consensus Estimate for consulting bookings is pegged at $6 billion, reflecting year-over-year growth of 15.4%. For outsourcing bookings, the consensus mark stands at $4.96 billion, mirroring 7.9% growth year over year. High demand for digital, cloud and security related services are expected to be key drivers of Accenture’s bookings in the to-be-reported quarter.

In the second quarter of fiscal 2018, consulting and outsourcing bookings totaled $5.7 billion and $4.6 billion, respectively.

Zacks Rank & Stocks to Consider

Currently, Accenture has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Business Services sector include NV5 Global, Inc. (NVEE - Free Report) , The Dun & Bradstreet Corporation and FLEETCOR Technologies, Inc. (FLT - Free Report) . While Dun & Bradstreet sports a Zacks Rank #1 (Strong Buy), NV5 Global and FLEETCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for NV5 Global, Dun & Bradstreet and FLEETCOR Technologies is 20%, 4.5% and 16.5%, respectively.

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