Accenture (ACN) shares jumped 2.5% on Thursday to close at $343 after the company delivered strong fiscal fourth-quarter results and provided a Fiscal 2022 outlook well above the analyst expectations.
Markedly, shares of the global professional services company have gained 60% over the past year. (See Accenture stock charts on TipRanks)
The quarterly results were driven by strong demand momentum and robust growth across all segments, geographies, and industry groups.
In Q4, earnings of $2.20 per share grew 11% year-over-year and came in a cent ahead of analysts’ expectations of $2.19 per share. The company reported earnings of $1.99 per share in the prior-year period.
Additionally, revenues jumped 24% year-over-year to $13.42 billion, meeting consensus estimates. Notably, for the full year, revenues crossed the $50 billion mark for the first time.
The increase in revenues reflected a surge in Consulting revenues, which increased 29% to $7.31 billion, and 19% growth in Outsourcing revenues, which jumped to $6.11 billion. Notably, new bookings grew 7% to $15.0 billion during the quarter.
On top of this, gross margins improved 150 bps to 33.3% for the fourth quarter of fiscal 2020. Further, operating margins also grew by 30 bps during the quarter.
Additional $3B in Share Buybacks and 10% Dividend Increase
Concurrent with the earnings results, Accenture announced a hike in quarterly cash dividends by 10% to $0.97 per share.
Further, the company’s Board approved incremental share buybacks of $3 billion. This brings the total amount of the share repurchase program to $6.3 billion.
Fiscal 2022 Guidance Ahead of Expectations.
Based on robust Q4 results, management provided financial guidance for the first quarter and the Fiscal Year 2022.
For the Fiscal Year 2022, the company forecasts adjusted earnings in the range of $9.90 to $10.18 per share, while the consensus estimate is pegged at $9.87 per share. Revenues are projected to grow between 12% and 15%.
For the fiscal first quarter, revenues are projected to grow 18% – 22% and be in the range of $13.9 billion to $14.35 billion, versus analysts’ expectations of $13.51 billion.
Accenture CEO Julie Sweet commented, “We delivered these results while investing in our people and in the capabilities our clients need, now and in the future, and at the same time making progress on our sustainability goals — from progress in inclusion and diversity, to the use of renewable energy now at 50% across the globe, to supporting our communities during these challenging times. We measure our success by this 360° value creation.”
Following the Q4 results, Cowen & Co. analyst Bryan Bergin increased the price target on Accenture from $365 to $370 (7.9% upside potential) and reiterated a Buy rating.
Bergin said, “Fiscal 2022 growth outlook and the consistency in strong demand commentary around enterprise transformation is the key takeaway.”
He further added, “There is no material change to the narrative and as a result the stock is apt to maintain positive momentum as a derivative on enterprise transformation with stable and consistent execution.”
Consensus among analysts is a Strong Buy based on 16 Buys and 4 Holds. The average Accenture price target of $351.33 implies upside potential of 2.4% from current levels.
Accenture scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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