Accenture Posts Mixed 4Q Results, Issues Weak FY 2019 EPS View

Accenture Posts Mixed 4Q Results, Issues Weak FY 2019 EPS View
September 27, 2019

 

Management and technology consulting service provider Accenture Plc (NYSE: ACN) reported fiscal 2019 fourth-quarter earnings that beat analysts’ estimates. Revenues, however, missed analysts’ estimates. The company also issued FY 2019 earnings outlook below analysts’ forecasts. Following the announcement of results, the stock gained $1.25 or 0.65% to close at $192.12.

The Dublin, Ireland-based company reported fourth-quarter revenues of $11.06 billion, up 5% from $10.50 billion in the comparable quarter last year. The revenues were in line with company’s guided range of $10.85 billion to $11.15 billion. However, the reported figures were below analysts’ expectation of $11.08 billion.

Segment-wise

  • Consulting revenues – up 5% y-o-y to $6.19 billion
  • Outsourcing revenues – $4.87 billion representing an increase of 6% on y-o-y basis.

Revenues by operating group

  • Communications, Media & Technology – $2.22 billion, up 4% on y-o-y basis.
  • Financial Services – $2.12 billion, an increase of 2% from 4Q18.
  • Health & Public Service – $1.88 billion compared with $1.76 billion in the year-ago period.
  • Products – $3.09 billion, an increase of 6% on y-o-y basis.
  • Resources – $1.73 billion compared with $1.59 billion last year.

During the recent quarter, net income increased to $1.15 billion or $1.74 per share, from $1.05 billion or $1.58 per share in the fourth quarter of 2018. The Wall Street analysts had anticipated the company to report earnings of $1.71 per share for the quarter.

Commenting on 4Q19 results, Accenture’s CEO Julie Sweet said: “For the year, our record new bookings of $45.5 billion and revenue growth of 8.5% in local currency demonstrate excellent demand for our services, and we gained significant market share. We also delivered very strong profitability and returned a record $4.6 billion in cash to our shareholders, while continuing to invest across the business. As we look ahead to fiscal 2020, we will continue to be laser-focused on creating value for our clients, being a magnet for the best people in the industry and maximizing shareholder value.”

The gross margin for the quarter ended August 31st was 31.1%, compared with 30.8% in the prior-year period. Analysts had anticipated gross margin of 30.9% for the quarter. Operating margin for the August quarter was 14.2%, missing analysts’ forecasts of 14.3% by a narrow margin.

Total cash balance at the end of fourth-quarter was $6.10 billion, an increase from $5.10 billion in the year-ago quarter. New bookings for 4Q19 were $12.90 billion. In particular, consulting new bookings were $6.10 billion, or 47% of total new bookings. Outsourcing new bookings were $6.80 billion, or 53% of total new bookings.

For first-quarter of fiscal 2020, Accenture anticipates revenues in the range of $10.90 billion to $11.20 billion, representing growth in the range of 5% – 8%. Analysts are forecasting revenues of $11.25 billion.

Likewise, for FY 2019, the company anticipates revenues in the range of between $45.4 billion and 46.7 billion, representing a growth of 5% to 8%. The Consensus estimate currently stands at $46.12 billion. Accenture anticipates earnings in the range of $7.62 to $7.84 per share, reflecting a growth of 4% to 7%. The Wall Street analysts are expecting earnings of $7.96 per share.

Furthermore, the company anticipates FY20 operating cash flow to be between $6.35 billion and $6.75 billion. Free cash flow for the quarter is expected to be in the range of $5.70 billion to $6.10 billion.

Commenting on the 1Q 2019 and FY 2019 forecast, Julie Sweet, Accenture’s chief executive officer, said, “As we look ahead to fiscal 2020, we will continue to be laser-focused on creating value for our clients, being a magnet for the best people in the industry and maximizing shareholder value.”

The company’s Board of Directors has declared a quarterly cash dividend of $0.80 per share, payable on November 15th, 2019. The latest quarterly cash dividend represents 10% increase from the quarterly dividend of fiscal 2019.

The upbeat earnings are expected to keep the stock bullish in the short-term.

The historical price chart indicates that the stock continues to receive support from the 50-day moving average. Additionally, the stochastic oscillator is in the bullish region. As a result, we can expect the stock to move up in the short-term.

acn - technical analysis - 27th Sept 2019

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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