Accenture Plc (ACN - Free Report) is set to report fourth-quarter fiscal 2017 results on Sep 28. Last quarter, the company posted a positive earnings surprise of 1.33%. Notably, over the last four quarters, it has outperformed the Zacks Consensus Estimate with an average positive earnings surprise of 2.6%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

We are positive about Accenture’s latest product additions in the analytics application space, given the increasing demand for digital solutions. Moreover, the company’s strategy of growing through acquisitions is encouraging. These acquisitions have enabled Accenture to foray into new markets, diversify and broaden its product portfolio, as well as maintain a leading position. We believe these will have a positive influence on the company’s upcoming quarterly results.

Furthermore, the recent forecast for worldwide IT spending by Gartner gave some optimism about Accenture’s near-term performance. The research firm estimates worldwide IT spending to grow 2.4% to $3.48 trillion, marking a solid recovery after two consecutive years of decline.

The research firm noted two major catalysts which, it believes, will drive IT spending this year. The first catalyst highlighted by Gartner is decline in the U.S. dollar against several foreign currencies. Secondly, the firm foresees an uptick in digital transformation projects in the near term, which will enable organizations to spend more on IT related infrastructure, products, and services. All these encourage us about the company’s fiscal fourth-quarter overall performance.

Nonetheless, Accenture’s February 2017 announcement of creating 15K new jobs by 2020 and investment plan of $1.4 billion for employee training and opening of 10 innovation centers across the U.S. cities may dent its bottom-line results, in our opinion. The company has already started to work on this space, by opening two innovation centers and hiring people over there.

The company is believed to be preparing itself for a more protectionist U.S. technology-visa program under President Trump. It should be noted that out of more than 394,000 of its total workforce, 140,000 are in India, which provides it a cost advantage. With the addition of 15,000 new jobs, Accenture’s total employee count in the United States will increase by 30% to 65,000, thereby increasing its salary expenses significantly.

Additionally, heightening competition from peers such as Cognizant Technology Solutions (CTSH - Free Report) and International Business Machines Corporation, as well as an uncertain macroeconomic environment may deter its growth to some extent.

Currently, the Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.46 on $9-billion revenue projection.

Accenture PLC Price and EPS Surprise

Accenture PLC Price and EPS Surprise | Accenture PLC Quote

Earnings Whispers

Our proven model does not conclusively show that Accenture will likely beat on earnings 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. That is not the case here as you will see below:

Zacks ESP: Accenture’s Earnings ESP is -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Accenture carries a Zacks Rank #2. Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Paychex, Inc. (PAYX - Free Report) has an Earnings ESP of +0.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Constellation Brands Inc (STZ - Free Report) , has an Earnings ESP of +0.99%, and carries a Zacks Rank #2.