Accenture plc (NYSE: ACN) reported fiscal 2021 first-quarter earnings and revenue that surpassed Wall Street estimates. The company also issued an upbeat second-quarter revenue growth view for FY 2021. Furthermore, Accenture also boosted its quarterly cash dividend by 10% while lifting FY 2021 free cash flow expectations. The stock closed at $264.47, up to $17.02 or 6.88% from the previous close.
Dublin, Ireland-based Accenture reported first-quarter revenues of $11.762 billion, up 3.5% from $11.358 billion in a similar time frame the previous year. Wall Street analysts had anticipated the professional services company to post revenues of $11.36 billion for the quarter.
The quarter ended November 30th, 2020, the company posted a $1.502 billion net income, or $2.32 per share, compared with $1.359 billion, or $2.09 a share, on November 30th, 2019.
Excluding after-tax investment gains and other charges, Accenture recorded 1Q 2021 adjusted earnings of $1.425 billion, or $2.17 per share, compared with adjusted earnings of $1.325 billion, or $2.01 a share in 1Q 2020. Analysts polled by Thomson Reuters had anticipated the company to post payments of $2.05 per share.
Commenting on the impressive earnings, Julie Sweet, Accenture’s CEO, stated, “I am pleased that we delivered first-quarter revenues above our expectations, with broad-based improvement across industries and geographic markets […]. New bookings, profitability, and free cash flow were all very strong, and we again returned substantial cash to shareholders while continuing to invest in our business and our people.”
Consulting revenues decreased 1% y-o-y to $6.33 billion. Outsourcing earnings were $5.43 billion, up 9% on a y-o-y basis.
Segment-wise:
- Communications, Media & Technology revenues were $2.33billion, up 4% on y-o-y basis.
- Financial Services revenues increased 7% y-o-y to $2.35billion.
- Health & Public Service revenues were $2.21billion, an increase of 12% from 2019.
- Products revenues remained flat at $3.21billion.
- Resources revenues fell 4% to $1.66 billion.
- Gross margin increased slightly to 33.1% in the recent quarter, from 32.1% in 1Q 2020.
In the future, Accenture anticipates revenues for 2Q 2021to be between $11.55 billion and $11.95 billion, reflecting an increase of 1% to 4% on a y-o-y basis. The Street analysts anticipate revenues of $11.35 billion for the second quarter.
For FY 2021, the company forecasts revenue growth from 4% to 6% on a y-o-y basis, up from the earlier guidance range of 2% to 5%.
Accenture now anticipates FY 2021 GAAP earnings in the range of $8.17 to $8.40 per share, increasing from the prior guidance range of $7.80 to $8.10 a share. Excluding charges, FY 2021 adjusted earnings are anticipated to be between $8.02 and $8.25 per share, mirroring a gain of 8% to 11% over adjusted FY 2020 earnings of $7.46 per share. Analysts currently expect FY 2021 earnings of $8.05 per share on revenues of $46.72 billion.
For FY 2021, the company anticipates operating cash flow of between $6.64 billion and $7.15 billion, compared with the prior outlook range of $6.35 billion to $6.85 billion. Furthermore, free cash flow is anticipated to be between $6 billion and $6.50 billion, up to $300 million from the prior range of $5.70 billion to $6.20 billion.
Accenture paid a quarterly cash dividend of $0.88 per share on November 13th, 2020. Yesterday, while announcing first-quarter results, the company announced another quarterly cash dividend of $0.88 per share, payable on February 12th, 2021. The declared dividend represents a 10% rise over the quarterly dividend of $0.80 per share in FY 2020.
During 1Q 2021, Accenture bought back 3.30 million shares worth $769 million. Notably, roughly 2.90 million shares were purchased in the secondary (open) market. At the end of November 30th, 2020, the company still had approximately $5.70 billion left under share repurchase authorization.
The quarterly earnings beat and upbeat FY 2021 outlook are expected to keep the stock bullish in the short-term.
The historical price chart indicates that the stock moves along an ascending trend line, as shown below. The MACD indicator is also making new highs. Therefore, we are anticipating the store to remain in an uptrend in the short-term.
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