) is scheduled to announce its first quarter fiscal 2013 results
after markets close on December 19, 2012. We notice limited
movements in estimates.
Fourth Quarter Overview
Accenture delivered modest fourth quarter results, matching the
Zacks Consensus Estimate on the bottom line. The quarter's
earnings came in at 88 cents per share, down 3.5% from the
year-ago quarter due to a higher tax rate, lower non-operating
income as well as foreign-exchange headwinds, partially offset by
higher margins and a lower share count.
The company's reported revenue increased 2.2% year over year to
$6.69 billion, which moderated from the previous quarter due to
weak segment performances and Euro issues. Consulting revenue
dropped 4.0% to $3.74 billion. However, Outsourcing revenues
increased 10.0% from the year-ago quarter to $3.10 billion.
Gross margin fell short of the year-ago figure due to higher
subcontractor costs, recruitment and training costs as well as an
increase in annual compensation. But due to operating cost
control, operating margin remained unchanged at 13.8%.
Accenture projects a solid sequential increase in its first
quarter 2013 revenue even after including a 3% negative
For fiscal 2013, management expects net revenue to grow in the
range of 5.0% to 8.0%. Expectation for new bookings is in the
range of $31.0 billion to $34.0 billion. The company continues to
expect operating margin in the range of 14.0% to 14.1% and the
annual tax rate between 26.0% and 27.0%. Diluted EPS expectation
is between $4.22 and $4.30.
Agreement of Analysts
The analysts are of opinion that Accenture's
consulting/outsourcing/offshore combination continues to see
global enterprise client demand for high-end but cost effective
service delivery. Given its global footprint and client base,
Accenture will remain well positioned to benefit from multiple
technology drivers including cloud initiatives, SaaS (software as
a service), mobility, digital marketing, and analytics among
Some analysts expect Accenture to meet its own guidance for the
first quarter. But they also believes that macro uncertainties,
European exposure, foreign exchange headwinds, slowing bookings
growth and a discretionary spending environment will lead the
company to maintain its fiscal 2013 outlook.
All the 18 estimates for the first quarter remained unchanged for
the last 30 days. However, out of the 21 estimates for fiscal
2013, only one was revised upward in the past 30 days. The
limited movement since Accenture reported fourth quarter results
suggests that there is a lack of driving events.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the first quarter and fiscal
2013 remained unchanged at $1.04 and $4.27, respectively, over
the past 30 days. But we do notice upward movements over the past
90 days. Estimates grew 3.0% (3 cents) and 3.4% (14 cents) for
the first quarter and fiscal 2013, respectively. We believe that
the positive estimate revisions reflect the company's upbeat
We are encouraged by management's first quarter outlook and its
assurance to continue investing in priority industries (such as
Communications), emerging markets, other geographical regions as
well as boosting its brand value. We believe that these would act
as catalysts to the stock.
But stiff competitive pressure from
International Business Machines Corp.
Computer Sciences Corp.
) and Unisys Inc. (UIS), a strained spending environment and
Accenture's broad European exposure are concerns.
Currently, Accenture has a Zacks #3 Rank (Hold).
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