Professional Service Company Still Pricey: Accenture


Pullback has yet to provide good discount to one of the largest professional services provider

Accenture, a nearly $100 billion Dublin-based professional service company, has recently experienced a minor 5.4% pullback in its share price in contrast to the broader market performance (~10% down at the time of writing).

The 29-year-old company also reported its first-quarter results in December 2017.

Accenture reported 11.6% rise in revenue and 11.9% increase in profits in the quarter ending in November compared to its year-earlier performance.

The company also carried negligible debt with a book value of $9.1 billion (+$1.7 billion from year ago).

“We delivered excellent financial results for the first quarter. I am particularly pleased with our broad-based revenue growth of 10 percent in local currency – including double-digit growth in four of our five operating groups and two of our three geographic regions – as well as very strong new bookings. We also delivered 13 percent growth in earnings per share and returned $1.4 billion in cash to our shareholders.

“Our outstanding results reflect the significant investments we have made to differentiate Accenture – especially in digital, cloud and security services, which account for more than half of our total revenues. Our growth strategy is clearly resonating with our clients, and we are very well-positioned to continue gaining market share, driving profitable growth and delivering value for our clients and shareholders.”

Pierre Nanterme, Accenture’s chairman and CEO

In the past three years, Accenture has provided $10.2 billion in financing activities (mostly consisted of share buybacks and dividend payouts), while having generated an accumulated free cash flow of $12.2 billion.

Conservative valuation indicated a per share figure of $117.60/share (vs. $153.84 at the time of writing). Analysts, meanwhile, have an average price target of $163.59/share.

Disclosure: No shares in Accenture.

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