Since Accenture (ACN) is partly an outsourcing company, maybe it can't be used as a pure read on the global economy. But if it could then the world will be just fine.
After the close, ACN reported record revenues, EPS, operating margin, free cash flow and new bookings for fiscal 2011. All this leading the company to increase the semi-annual dividend by 50% to provide a dividend yield of roughly 2.7%. The board of directors also approved $5B of additional share repurchases.
Clearly the BOD has great faith in the global economy skirting a recession to raise the dividend by a whopping 50%. Naturally everything could change if Europe implodes, but ACN knows that risk exists and it still went forward with the bump. Of course, the buyback could be curtailed if something goes awry.
The stock remains a top pick in our Net Payout Yields (NPY) model with a decent dividend going from 1.9% to 2.7% and a net stock buyback of a little over $1B during the last 12 months. Based on the new dividend, the NPY yield will be a decent 6% and might increase going forward if the buyback is more aggressive in fiscal 2012.
The market continues to price in a repeat of 2008. Look at a chart of 2008 and ACN has already seen a similar if not bigger impact to its stock price even though business remains strong and the company is even stronger.
Per ACN's PR:
- Fourth-quarter revenues increased 23% in U.S. dollars and 14% in local currency, to $6.7 billion. Quarterly EPS increased 38%, to $0.91. Free cash flow is $1.2 billion.
- For full year, revenues increased 18% in U.S. dollars and 15% in local currency, to $25.5 billion. EPS increased 28%, to $3.40, and free cash flow is $3.0 billion.
- New bookings are $8.4 billion for fourth quarter and $28.8 billion for full year.
- Company increases semi-annual cash dividend 50%, to 67.5 cents per share. Board of directors approves $5 billion of additional share repurchase authority.
- For fiscal year 2012, Accenture expects net revenue growth of 7% to 10% in local currency and EPS of $3.80 to $3.88, an increase of 12% to 14%.
Accenture plc has declared a semi-annual cash dividend of 67.5 cents per share on Accenture plc Class A ordinary shares for shareholders of record at the close of business on Oct. 14, 2011, and Accenture SCA will declare a semi-annual cash dividend of 67.5 cents per share on Accenture SCA Class I common shares for shareholders of record at the close of business on Oct. 11, 2011. Both dividends are payable on Nov. 15. This represents an increase of 22.5 cents per share, or 50%, over the company’s previous semi-annual dividend, declared in March.
Share Repurchase Activity
During the fourth quarter of fiscal 2011, Accenture repurchased or redeemed 13.1 million shares for a total of $731 million, including $621 million for 11.3 million shares repurchased on the open market. During the full fiscal year 2011, Accenture repurchased or redeemed 42.8 million shares for a total of $2.17 billion, including $1.31 billion for 24.3 million shares repurchased in the open market. The Accenture Board of directors has approved $5 billion in additional share repurchase authority, bringing Accenture’s total outstanding authority to approximately $6 billion.