Accenture Hits All-Time High on Heels of Hot Report

| About: Accenture plc (ACN)

Accenture (NYSE:ACN) is a global management and technology consulting company, second only to IBM (NYSE:IBM) in consulting. As a service provider to other businesses, Accenture is seen as a good indicator of business spending. In its most recent quarterly report, Accenture proved that capital investment in technology is driving the economic recovery. Here’s the earnings breakdown:

Earnings: Increased by 20.9% to $.81 per share, or $599.4 million, compared to $.67 per share, or $518.8 million, in the same period a year ago.

Revenue: Increased 12.3% to $6.05 billion, compared to $5.38 billion in the prior year.

Actual Versus Wall Street Expectations: Earnings of $.81 cents per share beat expectations by $.06 cents. The consensus analyst earnings expectation was $.75 cents per share. Revenues beat the expected $5.79 billion revenue estimate (Thomson Reuters).

Notable Stats:

  • Accenture has beaten earnings and increased sales for the third straight quarter.
  • Total cash balance as of November 30, 2010, was $4.16 billion versus $4.84 billion as of August 31, 2010.
  • Accenture repurchased 14.6 million of its common outstanding shares at a total value of $620.0 million.
  • Accenture declared a semi-annual cash dividend of $.45 cents per share in the reported quarter.
  • For fiscal 2011, Accenture expects net revenue growth in the range of 8.0% to 11.0%, previously the company expected 7.0%-10.0% growth. Accenture boosted their earnings outlook of a diluted EPS of $3.08–$3.16 per share, from $3.00–$3.08 per share.

Did You Hear That?

William D. Green, Accenture’s Chairman & CEO, said:

We delivered very strong revenue growth — including double-digit local-currency growth in four of our five operating groups — as well as 20 percent EPS growth…We continue to see strong demand for our services, demonstrated by bookings of more than $6.3 billion in the quarter, including our highest consulting bookings in more than two years.

Commentary: Shares of ACN finished off 2009 at $41.50 per share. After today’s almost 10% rise in shares due to a solid quarter, the stock is trading at over $51 per share, or 22.8% higher in 2010. Recently, Hilton Worldwide signed a multi-year technology services contract with Accenture. Under the agreement, Accenture will work with heavyweights Microsoft (NASDAQ:MSFT). Shares of ACN are well above the 50-day and 200-day moving averages. Considering today’s big jump in stock price, look for a calmer period as a more attractive entry point.

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Disclosure: No position