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Accenture Maintains Its Strong Capital Return Policy

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Share repurchase guidance

Accenture (ACN) continues to boost its shareholder returns via share buybacks and regular dividend payments. At the end of fiscal 1Q18, the company had paid back more than $1.4 billion worth of capital to its investors through buybacks and dividend payments compared to $1.37 billion last year during the same period.

In fiscal 1Q18, the company paid $854 million in dividends compared to $785 million in fiscal 1Q17. Likewise, it bought back shares worth $563 million in fiscal 1Q18 compared to $588 million in fiscal 1Q17. In fiscal 2018, the company expects to return nearly $4.3 billion to its shareholders through share buybacks and dividend payments compared to $4.5 billion in fiscal 2017.

In the graph above, we can see that in the last four years, the company has returned capital to its shareholders at an average of nearly $4 billion per year through dividend payments and share repurchases.

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Strong free cash flow drives capital return policy

At the end of November 2017, the company was left with $2.6 billion worth of shares to be repurchased under its buyback program. In order to enhance investor wealth, Accenture has also decided to slash its weighted average diluted shares outstanding by nearly 1% in fiscal 2018.

The company exited fiscal 1Q18 with free cash flow of $872 million. Over the last four years, the company has maintained an average free cash flow of nearly $3.9 billion every year. This strong free cash flow trend may allow the company to move forward with its ongoing capital return policy.

International Business Machines (IBM) returned capital worth nearly $9.8 billion in fiscal 2017—more than double the capital Accenture returned in the comparable period.

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