For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Accenture plc (NYSE:ACN) useful as an attempt to give more color around how Accenture is currently performing.
Did ACN beat its long-term earnings growth trend and its industry?
ACN's trailing twelve-month earnings (from 31 August 2019) of US$4.8b has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.5%, indicating the rate at which ACN is growing has accelerated. What's enabled this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if Accenture has seen some company-specific growth.
In terms of returns from investment, Accenture has invested its equity funds well leading to a 33% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US IT industry of 6.1%, indicating Accenture has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Accenture’s debt level, has declined over the past 3 years from 41% to 34%.
What does this mean?
Though Accenture's past data is helpful, it is only one aspect of my investment thesis. While Accenture has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Accenture to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ACN’s future growth? Take a look at our free research report of analyst consensus for ACN’s outlook.
- Financial Health: Are ACN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 August 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.