Briefing on the Fundamentals of Accenture (ACN)

Accenture logged a 0.5% change during today's morning session, and is now trading at a price of $304.57 per share.

Over the last year, Accenture logged a -1.0% change, with its stock price reaching a high of $327.93 and a low of $242.8. Over the same period, the stock underperformed the S&P 500 index by -8.0%. As of April 2023, the company's 50-day average price was $312.07. Accenture plc, a professional services company, provides strategy and consulting, interactive, industry X, song, and technology and operation services worldwide. Based in Dublin, Ireland, the large-cap Consumer Discretionary company has 732,000 full time employees. Accenture has offered a 1.5% dividend yield over the last 12 months.

The Business Has Operating Margins Consistently Higher Than the 9.03% industry Average:

2017-10-26 2018-10-24 2019-10-29 2020-10-22 2021-10-15 2022-10-12
Revenue (MM) $36,765 $40,993 $43,215 $44,327 $50,533 $61,594
Gross Margins 30.0% 30.0% 31.0% 32.0% 32.0% 32.0%
Operating Margins 13% 14% 15% 15% 15% 15%
Net Margins 9.0% 10.0% 11.0% 12.0% 12.0% 11.0%
Net Income (MM) $3,445 $4,060 $4,779 $5,108 $5,907 $6,877
Net Interest Expense (MM) $22 $37 $65 $36 -$26 -$2
Depreciation & Amort. (MM) -$802 -$927 -$893 -$1,773 -$1,891 -$2,088
Earnings Per Share $5.22 $6.2 $7.35 $7.88 $9.14 $10.7
EPS Growth n/a 18.77% 18.55% 7.21% 15.99% 17.07%
Diluted Shares (MM) 660 655 650 648 646 643
Free Cash Flow (MM) $5,479 $6,646 $7,226 $8,814 $9,555 $10,259
Capital Expenditures (MM) -$506 -$619 -$599 -$599 -$580 -$718
Net Current Assets (MM) -$882 -$139 $488 -$1,830 -$3,412 -$2,905
Long Term Debt (MM) $22 $20 $16 $54 $53 $46
Net Debt / EBITDA -0.76 -0.74 -0.85 -1.02 -0.85 -0.68

Accenture has strong margins with a stable trend and a pattern of improving cash flows. Additionally, the company's financial statements display low leverage and a strong EPS growth trend. However, the firm has slimmer gross margins than its peers. Finally, we note that Accenture has weak revenue growth and a flat capital expenditure trend and just enough current assets to cover current liabilities.

Accenture Has Elevated P/B and P/E Ratios:

Accenture has a trailing twelve month P/E ratio of 27.8, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $12.46, the company has a forward P/E ratio of 25.0. Accenture's PEG ratio is 2.98 on the basis of the 9.4% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Accenture is likely overvalued compared to the book value of its equity, since its P/B ratio of 7.58 is higher than the sector average of 3.12. The company's shares are currently trading 230.0% above their Graham number. Overall, Accenture's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Accenture Has an Average Rating of Buy:

The 21 analysts following Accenture have set target prices ranging from $293.0 to $380.0 per share, for an average of $337.95 with a buy rating. As of April 2023, the company is trading -7.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Accenture has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 74.2% of the company's shares, and the insider ownership rate stands at 0.14%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $17,741,045,768.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.