Accenture plc ACN is set to report fourth-quarter fiscal 2024 results on Sept. 26, before market open.
The Zacks Consensus Estimate for earnings is pegged at $2.8 per share, indicating 2.2% growth from the year-ago quarter’s level. The consensus estimate for revenues is pinned at $16.3 billion, indicating 2.2% year-over-year growth. There has been no change in analyst estimates or revisions lately.
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The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 2.9%.
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Higher Chance of Q4 Earnings Beat for ACN
Our proven model predicts an earnings beat for ACN this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Accenture has an Earnings ESP of +0.04% and a Zacks Rank #2 at present.You can see the complete list of today’s Zacks #1 Rank stocks here.
Reinvention Partner Strategy to Drive ACN’s Growth in Q4
In the third quarter of fiscal 2024, Accenture reported that its clients’ prioritization of large-scale transformations accelerated its strategy to be a reinvention partner for its clients. This strategy’s success was reflected in the company’s bookings of $21.1 billion, up 22.1% from the year-ago quarter’s level. It included 23 clients with quarterly bookings of more than $100 million.
Accenture’s prioritization of being the reinvention partner is a crucial aspect of its strategy to generate stronger growth. We expect total bookings to increase 7.8% in the fourth quarter of fiscal 2024, indicating its success at being a reinvention partner. The revenues from these large-scale bookings are anticipated to continue to spread throughout the year. ACN’s strategic relationship with its clients positions the company to gain from the increased discretionary spending when the market rebounds.
ACN to Gain From Its Leading Position in GenAI Tech
ACN focused on Generative AI (GenAI) in the third quarter of fiscal 2024 and we expect it to do so even further in the upcoming quarters. Accenture’s GenAI comprised smaller projects as its clients were in the experimentation mode.
In third-quarter fiscal 2024, more than $900 million in GenAI bookings were observed. It has earned $2 billion in GenAI sales (year to date) and also achieved $500 million in revenues. This performance compares with sales of $300 million and revenues of $100 million from GenAI in fiscal 2023.
We believe that the company can leverage its leading position in GenAI to assist its clients in taking the required actions to reinvent and conduct large-scale transformation.
ACN Stock Comparison and Valuation
The stock has declined marginally in the past month against the industry’s 4.7% growth and the Zacks S&P 500 composite’s 1.6% increase.
Shares of one of its closest competitors, Capgemini SE CGEMY, have risen 2.7%, while that of another competitor, Cognizant Technology Solutions Corporation CTSH, have lost 1.5%.
One Month Price Performance
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Looking beyond the one-month performance, ACN stock has risen 9.9% over the past three months, suggesting that the current decline could be a precursor for the stock to enter a correction phase in the future.
Accenture is trading at a discount relative to its industry. If we look at the forward 12-month Price/Earnings ratio, its shares trade at 26.53X forward earnings, lower than the industry’s 38.12X.
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Based on trailing 12-month EV-to-EBITDA, ACN is trading at 17.45X, way below the industry’s 52.77X.
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Buy Accenture This Earnings Season
ACN, available at a discount relative to its industry, makes for an attractive investment opportunity at present. With strong top and bottom-line prospects, the company’s fourth-quarter fiscal 2024 results are expected to be influenced by the rise in bookings. Accenture’s objective to become the reinvention partner is likely to have been a vital aspect of its strategy to grow in the fourth quarter. The company’s focus on GenAI enables it to drive large-scale transformation for its clients, generating higher revenues.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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