It's been a good week for Accenture plc (NYSE:ACN) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to US$211. The result was positive overall - although revenues of US$11b were in line with what analysts predicted, Accenture surprised by delivering a statutory profit of US$2.09 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Accenture's 22 analysts are now forecasting revenues of US$46.1b in 2020. This would be a reasonable 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 3.1% to US$7.86. Yet prior to the latest earnings, analysts had been forecasting revenues of US$45.9b and earnings per share (EPS) of US$7.81 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.9% to US$218. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Accenture analyst has a price target of US$240 per share, while the most pessimistic values it at US$187. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how Accenture forecasts compare to the wider market's forecast performance. We would highlight that Accenture's revenue growth is expected to slow, with forecast 4.8% increase next year well below the historical 8.0%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Accenture.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Accenture. Long-term earnings power is much more important than next year's profits. We have forecasts for Accenture going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Accenture Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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