It's been a great afternoon session for Accenture investors, who saw their shares rise 1.6% to a price of $286.71 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Accenture's Valuation Is in Line With Its Sector Averages:
Accenture plc, a professional services company, provides strategy and consulting, industry X, song, and technology and operation services worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.06 and an average price to book (P/B) ratio of 3.18. In contrast, Accenture has a trailing 12 month P/E ratio of 26.0 and a P/B ratio of 6.65.
Accenture's PEG ratio is 3.08, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Generally Positive Cash Flows but an Average Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $40,993 | $43,215 | $44,327 | $50,533 | $61,594 | $64,112 |
| Operating Margins | 14% | 15% | 15% | 15% | 15% | 14% |
| Net Margins | 10% | 11% | 12% | 12% | 11% | 11% |
| Net Income (M) | $4,060 | $4,779 | $5,108 | $5,907 | $6,877 | $6,872 |
| Net Interest Expense (M) | $20 | $23 | $33 | $59 | $47 | $48 |
| Depreciation & Amort. (M) | $927 | $893 | $1,773 | $1,891 | $2,088 | $2,281 |
| Diluted Shares (M) | 652 | 649 | 647 | 645 | 639 | 637 |
| Earnings Per Share | $6.34 | $7.36 | $7.89 | $9.16 | $10.71 | $10.77 |
| EPS Growth | n/a | 16.09% | 7.2% | 16.1% | 16.92% | 0.56% |
| Avg. Price | $148.57 | $171.86 | $204.62 | $301.47 | $311.69 | $286.71 |
| P/E Ratio | 23.0 | 22.95 | 25.48 | 32.38 | 28.67 | 26.3 |
| Free Cash Flow (M) | $5,408 | $6,028 | $7,616 | $8,395 | $8,823 | $8,996 |
| CAPEX (M) | $619 | $599 | $599 | $580 | $718 | $528 |
| EV / EBITDA | 13.82 | 14.85 | 15.25 | 20.24 | 17.59 | 16.56 |
| Total Debt (M) | $25 | $20 | $69 | $65 | $55 | $147 |
| Net Debt / EBITDA | -0.64 | -0.8 | -1.03 | -0.59 | -0.51 | -0.63 |
| Current Ratio | 1.33 | 1.39 | 1.45 | 1.22 | 1.26 | 1.33 |
Accenture has generally positive cash flows and growing revenues and a flat capital expenditure trend. Additionally, the company's financial statements display positive EPS growth and healthy leverage levels. Furthermore, Accenture has decent operating margins with a stable trend and just enough current assets to cover current liabilities, as shown by its current ratio of 1.33.
