Accenture Likely To Report Strong Fiscal Q3 Numbers Despite Trade Tensions

Accenture (NYSE:ACN) reports its Q3 results on Thursday, June 27. The company Q2 results beat consensus expectations for revenue and EPS, with the management revising its full-year revenue growth expectation upwards from 6-8% to 6.5-8.5%. We will be listening in for management commentary around recovery in the company’s federal and financial services businesses, as well as for details about expected traction from Accenture’s focus on custom applications, and its recent partnership with Google.  We will also look to understand how the company expects the trade war and Brexit to impact its business over subsequent quarters.

We currently have a price estimate of $170 per share for Accenture, which is roughly 10% 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). Segment revenues in Q2 reached $5.8 billion (+5.7% y-o-y), and we expect Q3 revenues to touch $6.5 billion (+7.6% y-o-y). Revenues for this segment should cross $23 billion (+7.5 % y-o-y) for full-year 2019.
• 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). We expect Q3 revenues to reach $4.9 (+6.4% y-o-y) and 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). We expect Q3 revenues to reach $11.5 (+7.1% y-o-y) and 2019 revenues to reach $42.4 billion (+7.2 % y-o-y).

We forecast Accenture’s EPS figure for full-year 2019 to be $8.29. Taken together with our forward P/E multiple of 21x for the company, this works out to a $170 per share price estimate for the company’s stock, which is about 10% lower than the current market price.

Do not agree with our forecast? Create your own price forecast for Accenture by changing the base inputs (blue dots) on our interactive dashboard.