Will Accenture Continue To Outperform Quarterly Revenue Estimates?

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Accenture (ACN) will be reporting its third quarter earnings on Thursday after the closing bell. The Estimize EPS consensus of $1.23 is set above Wall Street’s at $1.21, and there is no company issued guidance. Estimize predicts a revenue number of $7.59B, also above Wall Street’s $7.535B, and the company guidance is the lowest prediction at $7.475B. Revenue and EPS growth YoY has declined for the last several quarters. However, for the last four quarters, Accenture has significantly outperformed both Estimize and Wall Street’s predictions, so it will be interesting to see whether Accenture could pull this success off again.

There are several encouraging factors that could result in Accenture surpassing revenue estimates for the fourth quarter in a row. Accenture has continued to expand with product innovation and new acquisitions. Last quarter, Accenture’s outsourcing business experienced strong growth, boosting total revenues 5% YoY to $7.49B. Accenture has also been performing well with insurance, banking, and healthcare segments, showing an increased demand for its services. In more company-specific segments, Accenture has been an industry leader in its particular data segments of analytics, cloud implementation and digital marketing services. Moreover, the company has also been returning value to shareholders as of late, increasing dividends by six fold since its inception.

Although Accenture has succeeded in its expansion into new products, segments, and services, there are several potential drawbacks to consider. For one, Accenture continues to sign long-term contracts, which take longer to convert to revenue. Although deals may be underway, this quarter’s revenue could be underrepresented due to a delay on long-term business contract payments. Moreover, pricing pressure is hindering growth in the consulting industry as a whole. Lastly, China and Europe’s poor economic data could likely result in suppressed, slower growth in the global consulting industry for the remainder of FY’15.

Overall, Thursday’s report from Accenture is expected to be positive as Estimize and Wall Street are both predicting the company to outperform guidance. Accenture has a very strong track record of outperforming the revenue estimates, and this time the estimates are very positive.  

Disclosure: There can be no assurance that the information we considered is accurate or complete, nor can there be any assurance that our assumptions are correct.

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