Investors in Accenture plc (NYSE:ACN) had a good week, as its shares rose 5.4% to close at US$212 following the release of its quarterly results. Accenture reported US$11b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.90 beat expectations, being 3.2% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 26 analysts covering Accenture are now predicting revenues of US$46.4b in 2021. If met, this would reflect a credible 4.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 4.1% to US$8.10. In the lead-up to this report, the analysts had been modelling revenues of US$46.5b and earnings per share (EPS) of US$8.10 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 10% to US$220 despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Accenture's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Accenture, with the most bullish analyst valuing it at US$250 and the most bearish at US$165 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Accenture shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Accenture's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Accenture's revenue growth will slow down substantially, with revenues next year expected to grow 4.1%, compared to a historical growth rate of 8.5% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Accenture.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Accenture's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Accenture. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Accenture going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for Accenture that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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