Accenture's Q4 Earnings Beat Estimates, FY 2024 Revenue Growth Guidance Disappoints

RBC Capital's Daniel Perlin reiterated their Buy rating on Accenture (NYSE: ACN). The analyst also maintained a $340 price target.

Perlin issued their note after Accenture reported its Q4 and FY 2023 earnings on 2023/09/28. In their analysis, Perlin noted that while management's FY 2024 revenue growth guidance of 2% to 5% was slightly below BMO's estimate, it could be seen as "appropriately conservative". Despite this, BMO Capital remains confident in Accenture's ability to grow its operating margin, especially considering that artificial intelligence (AI) currently represents a relatively small portion of the company's total business. Perlin predicts that it will take some time before AI has a meaningful impact on Accenture's results.

Accenture's Q4 2023 earnings report revealed positive results. The company reported earnings per share (EPS) of $2.71, beating the Zacks Consensus Estimate of $2.62, as well as surpassing Q4 2022's EPS of $2.60 by 4.2%. Revenue for the quarter came in at $15.99 billion, in line with the Zacks Consensus Estimate and representing a 3.7% increase compared to Q4 2022's revenue of $15.42 billion. Additionally, Accenture generated an operating cash flow of $3.41 billion during the quarter.

For the full fiscal year 2023, Accenture reported EPS of $11.67, marking a 9% increase from FY 2022's EPS of $10.71. Revenue for FY 2023 reached $64.11 billion, surpassing the previous year's revenue of $61.59 billion by 4.1%. The company's operating cash flow for the fiscal year amounted to $9.52 billion.

Looking ahead, Accenture's management provided guidance for Q1 2024 and FY 2024. For the first quarter, the company expects revenue in the range of $15.85 billion to $16.45 billion. In terms of full-year projections, Accenture anticipates EPS between $11.97 and $12.32, revenue growth of 2% to 5%, and operating cash flow in the range of $9.3 billion to $9.9 billion.

CEO Julie Sweet expressed pride in Accenture's strong financial performance in FY 2023. She highlighted the company's ability to meet the needs of its clients, as evidenced by new bookings of $72 billion in FY 2023. Sweet also emphasized the increasing significance of AI, with clients' generative AI bookings reaching $300 million in the last six months.

In addition to Perlin's rating, other analysts also updated their assessments of Accenture on September 29, 2023. Baird's David Koning lowered the price target by -3% to $332 and maintained a Hold rating on the stock. Piper Sandler's Arvind Ramnani and TD Cowen's Bryan Bergin both lowered their price targets by -3.8% to $312 and maintained Hold ratings.

Currently, 57.1% of top-rated analysts consider ACN as a Strong Buy or Buy, while 42.9% rate it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that ACN's upcoming year will deliver earnings per share (EPS) of $13.03. If the analysts' predictions prove accurate, ACN's next yearly EPS will increase by 14.7% compared to the previous year.

Since Accenture's latest quarterly report on September 28, 2023, the stock price has risen by 2.1%. Year-over-year, the stock has seen an 18.9% increase. During this period, Accenture has outperformed the S&P 500, which has risen by 17.8%.

It is worth noting that RBC Capital analyst Daniel Perlin is ranked in the bottom 2% out of 4,343 Wall Street analysts by WallStreetZen. Perlin specializes in the Consumer Cyclical and Financial Services sectors, among others.

Accenture, founded in 1989 and based in Dublin, IE, is a management consulting, technology, and outsourcing services company. The company serves various industries, including communications, electronics, technology, media, entertainment, banking, capital markets, insurance, healthcare, chemicals, energy, forest products, metals and mining, and utilities.

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