On March 18, Accenture (NYSE:ACN), a software and technology consulting company, stock fell 4.2% and closed at $151.15. Based on the last closing price, the company has a market cap of $99.3 billion. The stock price has fallen 8.5% in the trailing five-day period, while it has fallen 9.2% in the trailing 12-month period.
Currently, Accenture stock is trading 30.2% below its 52-week high of $216.39 on February 19. The stock was also trading 6.4% below its 52-week low of $142.00 on Wednesday. On a year-to-date basis, the stock has fallen by 28.2% as of Wednesday.
Accenture’s financial performance
Today, Accenture announced its earnings for the second quarter of fiscal 2020 (quarter ended on February 29) before the market opened. The company reported sales of $11.14 billion with an adjusted EPS of $1.91. The sales rose 6.6% YoY (year-over-year) in the second quarter. Analysts expected the company to post sales of $11.10 billion and earnings of $1.72 in the second quarter.
Accenture’s two main business components are consulting and outsourcing. The company’s Consulting Services component accounts for 55.4% of its sales, while its Outsourcing Services component accounts for 44.6%. Accenture reduced its fiscal 2020 revenue growth guidance from 6%–8% to 3%–6% due to the coronavirus outbreak.
According to a Reuters report, “The online consulting and service provider forecast third-quarter revenue between $10.75 billion and $11.15 billion, compared with the average analyst estimate of $11.74 billion.” The report also said, “Accenture’s third-quarter and full-year 2020 business outlook reflects its assumptions, as of today, regarding the potential effect of the coronavirus pandemic.”
Analysts expect Accenture’s revenues to rise by 6.2% in fiscal 2020 to $45.9 billion. The sales will likely rise by 6.8% in fiscal 2021 to $49.0 billion. The adjusted earnings will likely rise from $7.36 in fiscal 2019 to $7.84 per share in fiscal 2020. However, the profits could rise by 9.2% YoY to $8.58 per share in fiscal 2021.
Analysts’ recommendations on Accenture stock
According to the latest recommendations from 26 brokerage firms surveyed by Reuters, 19 of the analysts recommend a “buy,” six recommend a “hold,” and one recommends a “sell.” Analysts have an average target price of $207.22 on Accenture. The target price implies a return of 37.1% based on the closing price of $151.15 on Wednesday. The consensus target price for the stock declined from $223.21 in February. The lowest target price estimate is $165, while the highest is $246.00.
Many analysts decreased their target price for Accenture stock after the second-quarter earnings results. Wedbush decreased its target price from $225 to $175 on Accenture stock. Evercore ISI also declined its target price from $227 to $179.
Accenture’s stock returns
Currently, Accenture stock was trading 2.3% below its 20-day moving average of $177.14. Meanwhile, the stock is trading 12.1% below its 50-day moving average of $196.86 and 12.6% below its 100-day moving average of $198.06. The stock’s 14-day relative strength index score of 33 indicates that the stock is approaching the oversold zone.
Accenture has an upper Bollinger Band level of $217.34. The company’s middle Bollinger Band level is $179.81, while its lower Bollinger Band level is $142.27. On Wednesday, the stock closed near its lower Bollinger Band level, which indicates that the stock is oversold.
Currently, Accenture stock is trading at 19.28x its fiscal 2020 estimated EPS of $7.84. The stock is trading at 17.65x its fiscal 2021 estimated EPS of $8.56. Wall Street analysts expect Accenture’s earnings to rise at a CAGR of 8.85% over the next five years.
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