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 the company’s guided range of $10.85 billion to $11.15 billion. However, the reported figures were below analysts’ expectations 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 a 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 a 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 a gross margin of 30.9% for the quarter. The 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 the 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 a 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.
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