Granted, there aren't that many people who spend a lot of time thinking seriously about their accounting systems. For those who do, however, Accenture (NYSE:ACN) is one of the leaders in the field, providing not just options in accounting, but in business services in general. It would be easy to think that such a firm might have suffered from the office closures seen throughout the world of late, but based on its latest quarterly reports, the company is doing well and expects to continue doing well for the foreseeable future.
A Solid Hit
Whether you're measuring by generally accepted accounting principles (GAAP) or not, Accenture had one solid quarter by most every standard. The company turned in GAAP earnings per share (EPS) totals of $2.32, which beat estimates of $2.05 per share nicely. Even non-GAAP figures turned out well, as the company brought in $2.17 per share that way.
The company also topped expectations in revenue, bringing in $11.76 billion against an expected $11.36 billion. Both gross margin and operating margin rates were up, and beat expectations as well. Operating margin was up 50 basis points, hitting 16.1%, and operating income was up 7%, hitting $1.89 billion overall.
A Bright Future to Follow
Accenture followed up solid numbers from the past with a downright exciting look at its next quarter. The company actually improved its fiscal year 2021 outlook thanks to this quarter's turnout, and now expects revenue growth to show up between 4% and 6%. The consensus figures are in the middle of that range—almost precisely—expecting 4.94% growth rates for the year.
Accenture has good reason to expect such gains, too. Reports suggest the company's new bookings for the quarter were $12.9 billion, which was 25% higher than the first quarter of fiscal 2020. That was well before the coronavirus kicked in, so it's clear that recent issues won't be hitting Accenture with any severity. Further, the company believes in its numbers—and likely future returns—sufficiently to announce a quarterly cash dividend that's increased from the same time the preceding year. It's up 10%, reports note, going to $0.88 per share.
Analysts Look to Get in on the Gains
Meanwhile, our latest research shows the analyst community warming up to Accenture after some recent slight declines. However, the company has enjoyed a consensus “buy” rating for the last six months, with the only real difference being in terms of ratios. Currently, the consensus buy is made up of one “sell” rating, eight “hold” and 17 “buy”. That's almost the same as six months ago, when it was one “sell”, eight “hold” and 15 “buy.”
The price target has also been on an appreciable if slow, upward trend; six months ago, it sat comfortably at $211.76. Today it's sitting at $236.74, and given that the company closed yesterday at $247.57, it suggests either some likely upticks in price target or some potential downside to come. Given that three analysts have boosted their price targets in the last week, however, the idea of upswings in price target from other analysts isn't out of line.
Benefiting from Circumstance
The biggest boost to Accenture's fortunes in the last several months pretty much has to be the rise of everything-at-home that has come around since last March. By offering systems to address various business issues—and Accenture covers the waterfront from accounting to process automation to mobility and beyond—it's not only positioned itself well to be useful under “normal” conditions, but also in the event of a mass migration to cloud-based systems. Has there been a mass migration to cloud-based systems in recent months? Most assuredly there has.
This allowed Accenture to be right in the thick of things, giving businesses a better way to expand their operations to cover lots more remote work. It could also take advantage of its name recognition to make a better case for using its systems specifically, which likely helped spur the new bookings noted previously.
Basically, this is an operation that works just about as well out of the office as it does within, and that makes it tailor-made for current conditions. Even if the vaccine rollouts work exactly as hoped and the offices reopen, Accenture will be able to make that run back as well. When you can work both sides of a situation equally well, you should expect sound results, and that versatility makes Accenture an easy win for addition to a portfolio.
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