After reading Accenture plc’s (NYSE:ACN) latest earnings update (30 November 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether ACN has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
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Commentary On ACN’s Past Performance
ACN’s trailing twelve-month earnings (from 30 November 2018) of US$4.2b has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.7%, indicating the rate at which ACN is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely attributable to an industry uplift, or if Accenture has experienced some company-specific growth.
In terms of returns from investment, Accenture has invested its equity funds well leading to a 33% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US IT industry of 6.5%, indicating Accenture has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Accenture’s debt level, has declined over the past 3 years from 48% to 36%.
What does this mean?
Accenture’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Accenture to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ACN’s future growth? Take a look at our free research report of analyst consensus for ACN’s outlook.
- Financial Health: Are ACN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 November 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.