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Accenture

NYSE:ACN
Snowflake Description

Excellent balance sheet average dividend payer.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
ACN
NYSE
$93B
Market Cap
  1. Home
  2. US
  3. Software
2017/12/16
Company description

Accenture plc provides consulting, technology, and outsourcing services worldwide. More info.


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3 Month History
ACN
Industry
5yr Volatility vs Market

Value

 Is Accenture undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Accenture to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Accenture is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Accenture's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Accenture's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Accenture is overvalued based on earnings compared to the US IT industry average.
  • Accenture is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Accenture's expected growth come at a high price?
  • Accenture is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Accenture's assets?
  • Accenture is overvalued based on assets compared to the US IT industry average.
X
Value checks
We assess Accenture's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the IT industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the IT industry average (and greater than 0)? (1 check)
  5. Accenture has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (18.03%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Accenture is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$19,603

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $6,273 × (1 + 2.47%) ÷ (8.96% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$99,097

Present value of terminal value:
$64,537

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$84,140 = $19,603 + $64,537

Value = Total value / Shares Outstanding ($84,140 / 615)

Discount to Share Price

Value per share:
$136.88

Current discount (share price of $152.66): -11.53%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.96% = 2.47% + (0.861 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($92,951,480,957).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.861 = 0.861 (1 + (1- 35%) (0.03%))

Levered Beta used in calculation = 0.861



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Accenture expected to perform in the next 1 to 3 years based on estimates from 28 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
11.7%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Accenture expected to grow at an attractive rate?
  • Accenture's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • Accenture's earnings growth is positive but not above the US market average.
  • Accenture's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Accenture's earnings are expected to grow by 11.7% yearly, however this is not considered high growth (20% yearly).
  • Accenture's revenue is expected to grow by 6.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Accenture is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US IT industry average.
  • An improvement in Accenture's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Accenture's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Accenture has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Accenture performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Accenture's growth in the last year to its industry (IT).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Accenture's year on year earnings growth rate has been positive on average over the past 5 years.
  • Accenture's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • Accenture's 1 year earnings growth is negative, it can't be compared to the US IT industry average.
Earnings and Revenue History
Accenture's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • Accenture performed above the US IT industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess Accenture's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the IT industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Accenture has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Accenture's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Accenture's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Accenture is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Accenture's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Accenture's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Total debt is covered by total short term assets, assets are 482.5x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Accenture's level of debt (0.3% of total debt) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (0% vs 0.3% today).
  • Total debt is well covered by annual operating cash flow (19836.6%, greater than 20% of total debt).
  • Accenture earns more interest than it pays.
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Financial health checks
We assess Accenture's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Accenture has a total score of 5/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Accenture's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
1.74%
Current annual income from Accenture dividends. Estimated to be 1.91% next year.
If you bought $2,000 of Accenture shares you are expected to receive $35 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been stable in the past 10 years.
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Accenture's earnings are paid to the shareholders as a dividend.
  • Dividends paid are well covered by net profit (2.2x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (2.5x coverage).
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Income/ dividend checks
We assess Accenture's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Accenture afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Accenture has a total score of 4/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Accenture's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Pierre Nanterme, image provided by Google.
Pierre Nanterme
COMPENSATION $18,499,843
AGE 58
TENURE AS CEO 6.9 years
CEO Bio

Mr. Pierre Nanterme has been the Chief Executive Officer of Accenture Plc since January 1, 2011 and its Chairman since February 1, 2013. Mr. Nanterme has been the Chief Executive Officer of Accenture Holdings plc (Alternate Name, Accenture SCA) since April 2015. Mr. Nanterme is responsible for managing and driving the annual business performance of the company, formulating and executing long-term strategies and interacting with clients, employees, investors and other stakeholders. He is Accenture’s primary decision- and policy-maker, setting the tone for its values, ethics and culture. He has been with Accenture for 32 years. He is a proven leader with deep expertise in developing strong client relationships. He served as the Group Chief Executive of Financial Services Operating Group at Accenture Plc from September 1, 2007 to December 31, 2010. He served as the Chief Leadership Officer of Accenture Plc from May 2006 to September 2007 and served as its Managing Director of France from November 2005 to September 2007. He was responsible for Accenture's leadership development program. In that role, he oversaw Accenture's corporate citizenship initiatives globally. In 2006, he joined Accenture’s global leadership team, where he contributed to the planning and execution of Accenture’s successful long-term business strategy and the implementation of its global operating model. He served as Managing Director of Accenture's Financial Services operating group in Europe, Africa and Latin America. Mr. Nanterme spent most of his 23-year career with Accenture in the Financial Services operating group. He served as Managing Director of Accenture's Financial Services Core Europe operating unit and served as Global Managing Director for its Insurance industry group. Other leadership positions he has held at Accenture include Managing Director of the Strategy practice in West Europe and Managing Director of its client group in France, Belgium, Luxembourg and the Netherlands. At Accenture, he has held a wide variety of leadership positions across key parts of its business. He has been a Director at Accenture plc since October 20, 2010 and Accenture Holdings plc since April 2015. He has been the President of the MEDEF Commission for Economic Affairs and Public Finance in France since 2005 and is a Member of its Executive Board. He serves on the steering board of the European Commission’s European Cloud Partnership. He is a Member of the BUSINESSEUROPE Corporate Advisory and Support Group and serves on the executive board of TransAtlantic Business Dialogue. He was awarded the insignia of Chevalier (Knight) of the Legion of Honour in France in 2010. Mr. Nanterme holds a Master of Science degree in management from ESSEC Business School (École Supérieure des Sciences Économiques et Commerciales) in Paris.

CEO Compensation
  • Pierre's compensation has been consistent with company performance over the past year.
  • Pierre's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the Accenture management team in years:

4.8
Average Tenure
54.3
Average Age
  • The tenure for the Accenture management team is about average.
Management Team

Pierre Nanterme

TITLE
Chairman & CEO
COMPENSATION
$18M
AGE
58
TENURE
6.9 yrs

David Rowland

TITLE
Chief Financial Officer
COMPENSATION
$6M
AGE
56
TENURE
4.4 yrs

Gianfranco Casati

TITLE
Group Chief Executive of Growth Markets
COMPENSATION
$5M
AGE
58
TENURE
3.9 yrs

Sander van't Noordende

TITLE
Group Chief Executive of Products
COMPENSATION
$5M
AGE
54
TENURE
3.9 yrs

Julie Sweet

TITLE
Chief Executive of North America
COMPENSATION
$5M
AGE
50
TENURE
2.5 yrs

Jo Deblaere

TITLE
COO & Chief Executive of Europe
AGE
55
TENURE
8.3 yrs

Richard Clark

TITLE
Chief Accounting Officer & Corporate Controller
AGE
56
TENURE
4.3 yrs

Paul Daugherty

TITLE
Chief Technology & Innovation Officer
AGE
53
TENURE
1 yrs

Chad Jerdee

TITLE
Chief Compliance Officer & General Counsel
AGE
49
TENURE
2.5 yrs

Roxanne Taylor

TITLE
Chief Marketing & Communications Officer
TENURE
10.3 yrs
Board of Directors Tenure

Average tenure and age of the Accenture board of directors in years:

5.3
Average Tenure
60.8
Average Age
  • The tenure for the Accenture board of directors is about average.
Board of Directors

Pierre Nanterme

TITLE
Chairman & CEO
COMPENSATION
$18M
AGE
58
TENURE
4.8 yrs

Marge Magner

TITLE
Lead Director
COMPENSATION
$342K
AGE
68
TENURE
3.9 yrs

Gilles Pélisson

TITLE
Independent Director
COMPENSATION
$300K
AGE
60
TENURE
5.7 yrs

Jaime Gómez

TITLE
Independent Director
COMPENSATION
$304K
AGE
62
TENURE
4.3 yrs

Paula Price

TITLE
Independent Director
COMPENSATION
$304K
AGE
56
TENURE
3.6 yrs

Bill Kimsey

TITLE
Independent Director
COMPENSATION
$317K
AGE
75
TENURE
14.1 yrs

Charlie Giancarlo

TITLE
Independent Director
COMPENSATION
$307K
AGE
60
TENURE
9 yrs

Frank Tang

TITLE
Independent Director
COMPENSATION
$292K
AGE
49
TENURE
3.6 yrs

Arun Sarin

TITLE
Independent Director
COMPENSATION
$511K
AGE
62
TENURE
2.2 yrs

Nancy McKinstry

TITLE
Independent Director
COMPENSATION
$248K
AGE
58
TENURE
1.4 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Accenture's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Accenture has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

Accenture plc provides consulting, technology, and outsourcing services worldwide. Its Communications, Media & Technology segment provides professional services that help clients accelerate and deliver digital transformation, and enhance business results through industry-specific solutions for communications, media, and high tech industries, as well as for software platforms. The company’s Financial Services segment offers services that address profitability pressures, industry consolidation, regulatory changes, and the need to continually adapt to new digital technologies. This segment serves clients in banking, capital markets, and insurance industries. Its Health & Public Service segment provides research-based insights and offerings, including consulting services and digital solutions to help clients deliver social, economic, and health outcomes. This segment serves healthcare payers and providers, as well as government departments and agencies, public service organizations, educational institutions, and non-profit organizations. The company’s Products segment helps clients enhance their performance in distribution, sales, and marketing; in research and development, and manufacturing; and in business functions, such as finance, human resources, procurement, and supply chain. This segment serves clients in consumer goods, retail, and travel services industries; automotive, freight and logistics, industrial and electrical equipment, consumer durable and heavy equipment, and construction and infrastructure management companies; and pharmaceutical, medical technology, and biotechnology companies. Its Resources segment enables clients to develop and implement strategies, improve operations, manage complex change initiatives, and integrate digital technologies. This segment serves clients in chemicals, energy, forest products, metals and mining, and utilities and related industries. Accenture plc was founded in 1989 and is based in Dublin, Ireland.

Details
Name: Accenture plc
Ticker: ACN
Exchange: NYSE
Founded: 1989
Market Cap: $92,951,480,957
Shares outstanding: 614,717,816
Website: http://www.accenture.com
Address: Accenture plc
1 Grand Canal Square,
Grand Canal Harbour,
Dublin,
Co. Dublin, 2,
Ireland
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NYSE ACN Class A Common Shares New York Stock Exchange US USD 19. Jul 2001
DB CSA Class A Common Shares Deutsche Boerse AG DE EUR 19. Jul 2001
BMV ACN N Class A Common Shares Bolsa Mexicana de Valores MX MXN 19. Jul 2001
BOVESPA ACNB34 EACH BDR REPR 1 CLS'A'USD0.0000225 Bolsa de Valores de Sao Paulo BR BRL 24. Aug 2015
Number of employees
Current staff
Staff numbers
425,000
Accenture employees.
Industry
Industry: IT Consulting and Other Services
Sector: Software