Accenture Braces for Q1 Earnings Release Amid Growing AI Opportunities
Ireland-based Accenture plc (ACN), a top global professional services company, focuses on helping clients improve their digital capabilities, enhance operations, and boost revenue. With a market cap of $226.1 billion, Accenture offers a range of IT services and management consulting across various industries. The company is set to unveil its fiscal Q1 earnings on Tuesday, December 17.
Analysts Anticipate Earnings Growth
Analysts forecast that Accenture will report a profit of $3.39 per share, representing a 3.7% increase from last year’s $3.27 per share. The company has exceeded Wall Street’s earnings estimates in three of the last four quarters, with only one earnings miss during that period.
Strong Performance Driven by AI
In the last quarter, Accenture posted adjusted earnings of $2.79 per share, slightly above consensus forecasts, marking a 3% uptick from the previous year. This growth can be largely attributed to a surge in its generative AI business and a 230 basis point improvement in its GAAP operating margin.
Future Earnings Projections Look Promising
Looking ahead to fiscal 2025, analysts expect an earnings per share (EPS) figure of $12.77, which reflects a 6.9% rise from $11.95 in fiscal 2024. For fiscal 2026, EPS is projected to increase further to $13.77, representing a 7.8% annual growth.
Stock Performance Trails Major Indices
Year-to-date, Accenture’s shares have risen by 2.8%, which is below the S&P 500 Index’s 21.8% increase and the Technology Select Sector SPDR Fund’s (XLK) 19.6% return within the same timeframe.
Strategic Partnerships Boost Confidence
On October 2, Accenture announced an expanded collaboration with Nvidia (NVDA), launching the Accenture Nvidia Business Group. This initiative will employ 30,000 professionals trained to help businesses implement AI solutions. Following the announcement, Accenture’s stock gained 1.2%.
In addition, on September 26, ACN shares jumped by 5.6% after revealing its Q4 and full-year earnings. The Q4 revenue of $16.4 billion exceeded Wall Street’s estimate of $16.3 billion, reflecting a 3% increase year-over-year in U.S. dollars and a 5% rise in local currency. The company also reported $81.2 billion in new bookings for the year, a 15% hike in its quarterly dividend to $1.48 per share, and $4 billion in new share repurchase authority, all contributing to investor optimism.
Analysts Maintain a Positive Outlook
Currently, analysts hold a cautiously optimistic view of Accenture’s stock, giving it a “Moderate Buy” rating overall. Among 27 analysts tracking ACN, 17 recommend a “Strong Buy,” one suggests a “Moderate Buy,” and nine prefer a “Hold” rating. This represents an increase in bullish sentiment compared to three months ago, when only 15 analysts endorsed a “Strong Buy.” The average analyst price target for ACN stands at $381.24, indicating a potential upside of 5.7% from current levels.
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On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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