When Accenture plc (NYSE:ACN) announced its most recent earnings (29 February 2020), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Accenture has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see ACN has performed.
How Did ACN's Recent Performance Stack Up Against Its Past?
ACN's trailing twelve-month earnings (from 29 February 2020) of US$5.0b has jumped 11% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.8%, indicating the rate at which ACN is growing has accelerated. What's enabled this growth? Let's take a look at whether it is only because of an industry uplift, or if Accenture has experienced some company-specific growth.
In terms of returns from investment, Accenture has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US IT industry of 6.7%, 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 42% to 29%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should 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 29 February 2020. This may not be consistent with full year annual report figures.
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.
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