Accenture (NYSE:ACN) reported its fiscal Q3 results late last week. The company’s Q3 results beat consensus expectations for revenue and EPS, with the management revising its full-year revenue growth expectation upwards from 6.5-8.5% to 8-9%. While a slight spot of bother was the softness in bookings, the management attributed it to lumpiness and mentioned that it was nothing out of the ordinary. On the positive side, the financial services businesses performed as per management expectations and the company was also able to increase pricing due to the value of its offerings and thanks to stability in the broader demand environment.
Per Trefis, we estimate Accenture’s fair value to be $176 per share, which is roughly 5% below the current market price. Our interactive dashboard on Accenture’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes, and see all Trefis technology company data here.
Accenture’s business model and trends in segment revenues
Accenture makes money by offering professional services including consulting and outsourcing across strategy and technology.
- Consulting: Over the last two years (fiscal 2016-18), this segment contributed $3.7 billion in total revenue (CAGR of +9.9%), with segment revenue reaching $21.6 billion (+15 % y-o-y). Q3 segment revenues reached $6.2 (+2.9% y-o-y) and we expect 2019 revenues to reach $23.2 billion (+7.5 % y-o-y).
- Outsourcing: Over the last two years, the segment added $3 billion in total revenue (CAGR of +9.5%), with revenues for the segment reaching $18 billion (+11.8 % y-o-y), Q2 segment revenues reached $4.7 (+5.3% y-o-y). Q3 segment revenues reached $4.9 (+5% y-o-y) and we expect 2019 revenues to reach $19.2 billion (+6.8 % y-o-y).
- Total: Over the last two years (fiscal 2016-18), total revenues grew by $6.7 billion and reached $39.6 billion (CAGR of +9.7%), Q2 revenues reached $10.5 (+5.5% y-o-y). Q3 segment revenues reached $11.1 (+3.8% y-o-y) and we expect 2019 revenues to reach $42.4 billion (+7.2 % y-o-y).
We forecast Accenture’s EPS figure for full-year 2019 to be $8.45. Taken together with our forward P/E multiple of 21x for the company, this works out to a $176 per share price estimate for the company’s stock, which is about 5% lower than the current market price.
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