Accenture Plc (NASDAQ: ACN) released its fiscal Q2 2022 earnings results on Thursday, March 17, 2020, in which it topped both earnings and revenue estimates and issued current quarter guidance above expectations.
What to look for: The company’s Q2 2022 performance demonstrates its continued robust demand across all its markets, industries, and services. Notably, Accenture continues to take considerable markets shares as clients turn to partner with the company to help them navigate the fast-changing market conditions. In addition, the company's new bookings were $19.6 billion during the quarter, with record bookings in outsourcing and consulting services of $8.7 billion and $10.9 billion, respectively.
Earnings: Stockearning’s Estimated EPS for the quarter was $2.37 per share, but the company produced earnings of $2.54 per share, representing a 14% YoY. A year ago, the company reported earnings of $2.23 per share. Historical EPS performance shows that the company has in the past 12 quarters topped estimates 31 times (86%), matched once (2%), and missed four times (11%).
Revenue: In the second quarter, the company had revenue of $15.05 billion compared to $12.09 billion a year ago, representing a YoY increase of 24%. Analysts had guided for revenue of $14.65 billion. In Q2 2021, the company had sales of $12.09 billion. During the quarter, outsourcing revenue of $6.72 billion was responsible for the outperformance, with consulting business being modestly better. For the third quarter, the company expects revenue of $15.7 billion to $16.15 billion compared to analysts' expectation of $15.16 billion. For fiscal 2022 the company expects revenue to grow between 24% and 26% in local currency compared to its previous projection of 19% to 22%.
Stock movement: ACN shares have lost 13.4% since the company released its last earnings release. Interestingly, following the earnings release, the company's shares have been UP 30 times in the past 47 quarters. So, the historical price reaction suggests a 63% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-3%, while the predicted volatility on the seventh day is +/-4%.
What analysts are saying: Stifel analyst David Grossman slashed his price target in the stock from $440 to $368 per share and maintained a Buy rating on the stock. According to the analyst, Accenture announced a good beat/raise but is trading lower, who also points out that the market is "not surprisingly" concerned about fiscal 2023 performance, causing the company to be re-rated until visibility improves. However, underlying momentum is picking up, according to Grossman, who claims that headcount additions and sales growth corrected for comparisons have both accelerated sequentially. Furthermore, considering how carefully they shape their public opinion and their previous conservatism, management spoke extremely optimistically about cyclical market demands and backlog, which he regards positively. While Accenture may remain range-bound in the short term, the analyst expects it will outperform the market as belief in the full-year 2023 estimate grows.
Baird Analys David Koning lowered the company’s price target from $410 to $350 and maintained a Hold rating in the shares. The analyst said that he expected better Q2 earnings, but the outlook will be narrowed to the midpoint which leaves his view of the risk/reward balances on the stock.
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