Accenture Confirms My Confidence

On Thursday, the global outsourcing and consulting giant, Accenture (ACN), reported Q4 earnings, beating analysts’ expectations and supporting its position at the head of my Top 10 Outsourcing Stocks list.

Accenture reported a 17% increase in revenues over the year to clock $6.0 billion for the quarter. Sequentially, revenues were marginally down from $6.1 billion reported earlier. For the year, revenues grew by 19% to $23.4 billion. 

During the quarter, Consulting revenues grew 19% to $3.6 billion and Outsourcing revenues grew 15% to contribute $2.4 billion. For the year, Consulting revenues of $14.1 billion recorded 19% growth while Outsourcing revenues grew 18% to $9.3 billion.

In the quarter, revenues from the Americas and EMEA grew 17% for each region while Asia Pacific revenues were up 24%.

EPS for the quarter of $0.67 grew 34% over the year and beat the Street’s expectations by a cent. For the year, EPS stood at $2.65, recording growth of 36%.

The company spent $609 million in the quarter to repurchase 15.2 million shares at an average price of $40.16 per share. For the full year, the company repurchased 60.8 million shares for approximately $2.3 billion at an average price of $37.20 per share. The company also announced a dividend of $0.50 per share in the quarter.

The company expects to retain the 9-12% growth trend, with bookings of $26-$29 billion for the year and EPS of $2.85-$2.93. For the coming quarter, the company expects revenues in the range of $6.15-$6.35 billion.

Accenture is able to use the economic challenges to its benefit. Its global delivery model, which focuses on low-cost delivery centers, and its ability to handle multiple processes, applications, and infrastructure outsourcing, has served the company well. It is able to offer outsourcing solutions to the financial services sector, which is looking to cut costs through outsourcing. Accenture’s technology consulting practice saw good growth as there was increased demand for systems integration and ERP solutions. 

Since Accenture has much more than plain labor arbitrage to offer as an outsourcer, it is best suited to compete with the various low-cost IT firms. Today, most companies are spending their IT budgets on transformational projects with focus on strategic use of technology. Accenture is one of the few companies that are able to offer this, thanks to the investments the company has been making in building these capabilities.

Accenture continued to acquire companies during the quarter and concluded the acquisition of George Group, a management consulting firm focused on driving performance improvements through strategic process improvements, accelerated innovation, and streamlined operations.

For the coming year, Accenture plans to implement a three-pronged strategy. First, the company will remain focused on operational priorities through improving differentiation through industry programs and assets, and improving cost to serve. Second, it will closely manage the business to cater to the uncertain markets. Finally, the company will continue to regard the challenging economic environment as an opportunity to help clients improve performance and transform their businesses.

The stock rose 1.6% in the after-hours session to close at $37.17. Earlier last week, it reached a new 52-week high of $43.04.

 

Disclosure: None

Comments

[tipalia:]

Tkx for your article, I bought ACN at 34$ and did not know if I made a mistake when I didn t sale it when it touched 43$. What should I do if or when it returns at 43$? Do you have an exit price or should I let it ride for a much longer time? I know that I made a mistake when I sold my AAPL ,with a nice profit , at 50$ and I would hate to make the same mistake,could you help me with this? thank you!

2008 Sep 28 10:16 AM

[Barb:]

User 138602

To find targets in a hurry for your stocks go to Yahoo Finance to find what the general opinion is on your stock then go to Analysts Opinion, It will give you a breakdown - mean targets upgrade downgrade history, etc.

2008 Oct 10 05:07 PM

[User 292514:]

You'd betterread this:
www.forbes.com/2004/06...

2008 Nov 06 05:56 AM