Accenture share price forecast: is Accenture a good stock to buy?
Accenture demonstrates solid growth with strong fourth-quarter results, but what does this mean for the Accenture stock forecast?
- Fourth-quarter results
- Stock market response
- Growth outlook
- Experts’ opinion
- Back to the office
- Appetite for acquisitions
- Final thoughts
The IT consulting firm Accenture (ACN) has seen a surge in demand for its cloud and security services as the Covid-19 pandemic altered the world of work. This was reflected in excellent fourth-quarter results with the company forecasting continued growth into the foreseeable future.
The Dublin-based firm, which has undergone huge growth since its inception in 1989, offers a broad range of services and solutions in strategy, consulting, digital, technology and operations. Accenture now serves clients in more than 120 countries, including 91 of the Fortune Global 100 and more than three quarters of the Fortune Global 500.
From recruitment to supply chain management and cloud collaboration, businesses have been forced to overhaul existing structures and adapt to the new normal. While a return to the office is a likely prospect for some organisations, others have opted to continue homeworking indefinitely. With the changing demands of employees, as a result of the pandemic, hybrid policies will likely become a mainstay for many companies.
While the prospects are certainly promising for the company, what does the future entail? What is the latest ACN stock forecast?
Let’s take a closer look at the results…
Accenture reported revenues increased by 24% in US dollars and 21% in local currency to $13.4bn (€12.2bn) over the fourth quarter. Earnings per share (EPS) on an adjusted basis increased 11% to $2.20 from $1.99 last year, beating analysts’ predictions of $2.19, according to data provided by Refinitiv IBES.
Revenues were in line with analysts’ predictions of $13.4bn, according to Refinitiv IBES data. For the full year ending 31 August, revenues rose by 14% in US dollars from $44.3bn in 2020 to $50.5bn this year, while EPS increased by 16% to $9.16 from $7.89.
The IT consultancy firm also increased its quarterly cash dividend by 10% to $0.97 a share.
In response to the results, Julie Sweet, Accenture’s chair and CEO, said: “We are very proud of our outstanding fiscal 2021 financial performance, reflecting growth significantly above the market and strong momentum heading into fiscal 2022.”
Jefferies analyst Surinder Thind, in a more dour response to the results, said: ”This is the first time in four quarters that revenues did not meaningfully exceed expectations, with the average beat being 3.3% the last three quarters.”
But what does this mean for the Accenture share price forecast?
Stock market response
After a dip in March 2020, Accenture stocks have continued to surge, gaining nearly 28% this year alone.
The stock market has responded favourably to the results published on 23 September. Accenture shares leapt by 2.5% on the day, closing at $343.00, up from $334.66 at close of the previous day.
Before we get to expert opinion on the ACN share price forecast, let’s look at Accenture's future earning expectations.
Accenture published an optimistic outlook for 2022, forecasting revenue growth of 12% to 15%, beating consensus predictions of 10%. The consultancy firm expects revenues in Q1 2022 to increase by between 18% and 22% compared with the first quarter of 2021.
The IT giant expects EPS to be in the region of $9.90 to $10.18 in 2022, surpassing analysts’ predictions of $9.87 a share on revenue of $55.53bn, including acquisitions. Accenture said it expects full year revenue to grow in a range of 12% to 15%, topping consensus estimates of 10%.
But what do analysts think?
According to the Financial Times, six analysts recommend a buy rating and 13 believe Accenture stock will outperform the market. A further seven experts have put a hold rating on Accenture shares, while zero analysts believe it will underperform and zero analysts recommend a sell rating.
Out of 23 analysts polled, the most optimistic estimate a 12-month price target of $445, an increase of 29.7% compared with the current price. The low end estimate for Accenture stock comes in at $290, a decrease of 15.5%. The median estimate represents a 6.4% increase from the current price of $343 to $365.
But are they right? Will the Accenture share price go up or down? Let’s look at the factors that may affect future performance.
Back to the office
While reverting to office-based work isn’t a reality for most companies, it’s important not to rule out the idea that once the Covid-19 Delta variant has been dealt with, homeworking may become less common.
Companies such as Google, Apple, Amazon and Facebook have postponed a return to the office until January 2022. Other companies, most notably in the finance sector, have taken a more hard-line approach, with Goldman Sachs ushering employees back as early as June. This month, JPMorgan Chase and Morgan Stanley followed suit.
While it does appear the hybrid approach is being employed by many companies, only time will tell if this approach is productive and able to withstand the test of time.
While such unknowns about the continued veracity of the Covid-19 pandemic remain, the future of work is hard to predict. Whichever way it plays out, it is sure to affect the Accenture stock price.
Appetite for acquisitions
Accenture forecasted it would spend a similar amount on acquisitions in the coming year compared with 2021.
Wedbush analyst Moshe Katri said in response to Accenture’s outlook statement: ”The targeted $4.2bn in acquisitions embedded in FY22’s guidance is consistent with the company’s almost 10-year record of acquiring entities that fit within its eco-system of digital based services.”
The company has completed more than 200 acquisitions since its inception, recently purchasing Blue Horseshoe, a supply chain management and strategy consulting firm. In 2021, Accenture made 46 acquisitions across a range of sectors, in order to meet the needs of its clients, expand into key markets and broaden its offering.
As the IT giant continues to expand, investing in everything from artificial intelligence, to blockchain technology and the most innovative cybersecurity products, the possibility for future growth looks promising.
By investing in cloud-based products before Covid-19 struck, the company placed itself in an ideal situation to capitalise on the changes wrought by the pandemic-related restrictions. CEO Julie Sweet said to analysts an earnings call: ”At the beginning of FY 21, after investing in cloud for a decade, we saw that the pandemic would dramatically accelerate our clients’ move to the cloud.”
Accenture has not only remained ahead of the tech curve, but also proved itself to have its finger on the pulse in terms of sustainability.
Environmental goals include achieving net-zero emissions by 2025, moving to zero waste and planning for water risks. The company appears set to meet these targets, with its current use of renewable energy now standing at 50%.
Commitment to sustainability in the long-term will no doubt help to bolster the reputation and longevity of the business. This may in turn have a positive effect on the Accenture share price over the longer term.
The speed at which change is occurring means making a share price forecast for 2021 is tricky but making an Accenture share price 5-year prediction is near on impossible!
While in the short term remote working continues to create favourable conditions for Accenture to perform well, only time will tell how the landscape changes and to what extent this will affect the Accenture stock price.
The consultancy giant, with its many bows and seeming unstoppable appetite for growth, may well continue to ride the waves of change, taking advantage of the new opportunities which it engenders.
Recent earnings suggest an optimistic future. However, it is important to consider the uncertainty that remains around the future of remote working. While analysts remain bullish on the Accenture share price, they do not perceive the company’s stock to be significantly undervalued.
It is also worth noting that any Accenture stock price prediction may not always be accurate – and it is down to you to make your own decision about whether you think the price will rise or fall.
Potentially. Analysts take differing views on what they believe the Accenture share price forecast will be. While predictions appear to be favourable in terms of growth, it is important do your own research and keep in mind that prices can go down as well as up. You should never invest more money than you can afford to lose.
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