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Is a Beat in the Cards for Accenture (ACN) in Q2 Earnings?

Zacks Equity Research

Accenture plc ACN is scheduled to report second-quarter fiscal 2019 results on Mar 28, before market open.

While the top line is likely to benefit from strength across the majority of segments, the bottom line is expected to be hurt by higher non-operating expense.

Over the past year, shares of Accenture have gained 8.2% compared with 10.4% rise of the industry it belongs and 6.4% rise of the Zacks S&P 500 composite.

 

Let’s check out the expectations in detail.

Strength Across Segments to Boost Revenues

The Zacks Consensus Estimate for second-quarter fiscal 2019 revenues is pegged at $10.29 billion, indicating growth of 7.3% year over year. The upside is likely to be driven by strength across the majority of its segments — Communications, Media & Technology, Health & Public Service, Products and Resources. In first-quarter fiscal 2019, net revenues of $10.6 billion increased 7% year over year.

Going by segments, the consensus estimate for Communications, Media & Technology revenues is pegged at $2.05 billion, indicating year-over-year growth of 5.9%. The segment should benefit from strength in Software & Platforms across all geographic regions. In first-quarter fiscal 2019, segment revenues of $2.13 billion increased 11% year over year.

The consensus mark for Health & Public Service revenues is pegged at $1.74 billion, indicating year-over-year growth of 6.1%. Segmental revenues are likely to be driven by growth in Public Service in Europe and Growth Markets.In first-quarter fiscal 2019, segment revenues of $1.75 billion increased 4% year over year.

The consensus estimate for Products revenues is pegged at $2.87 billion, indicating year-over-year growth of 9.1%. Segmental revenues are expected to be driven by strength across all geographic regions in Consumer Goods, Retail & Travel Services and Industrial in Europe and Growth Markets. In first-quarter fiscal 2019, segment revenues of $2.93 billion increased 8% year over year.

The consensus mark for Resources revenues stands at $1.64 billion, indicating year-over-year growth of 22.7%. Strength across all industry groups and geographies, driven by Chemicals & Natural Resources and Energy,should boost the segment. In first-quarter fiscal 2019, segment revenues of$1.65 billion increased 18% year over year.

The consensus estimate for Financial Services revenues is pegged at $1.94 billion, indicating year-over-year decline of 4%. Decline in banking & capital Markets in Europe is likely to weigh on the segment. In first-quarter fiscal 2019, segment revenues of $2.12 billion decreased 1% year over year.

Earnings Likely to Decline Year Over Year

The Zacks Consensus Estimate for earnings per share in the to-be-reported quarter is pegged at $1.57, indicating year-over-year decline of 0.6%. The bottom line is expected to be hurt by higher non-operating expense, which is likely to be partially offset by higher revenues, better operating results and lower effective tax rate.

In first-quarter fiscal 2019, adjusted earnings of $1.96 per share came ahead of the year-ago figure by 17 cents.

Our Model Suggests a Beat

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks, Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Accenture has an Earnings ESP of +1.91% and a Zacks Rank #3, a combination that increases the odds of an earnings beat.

Accenture PLC Price and EPS Surprise

Accenture PLC Price and EPS Surprise | Accenture PLC Quote

 

Other Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may also consider as our model shows that these have the right combination of elements to beat estimates.

IHS Markit INFO has an Earnings ESP of +0.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mastercard MA has an Earnings ESP of +0.02% and a Zacks Rank #3.

Avis Budget CAR has an Earnings ESP of +19.61% and a Zacks Rank #3.

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