Earnings Beat: Accenture plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

A week ago, Accenture plc (NYSE:ACN) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Accenture beat earnings, with revenues hitting US$12b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 12%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Accenture

Taking into account the latest results, the current consensus from Accenture's 27 analysts is for revenues of US$47.8b in 2021, which would reflect a reasonable 6.9% increase on its sales over the past 12 months. Statutory per share are forecast to be US$8.36, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$46.5b and earnings per share (EPS) of US$8.03 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Accenture 13% to US$272on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Accenture, with the most bullish analyst valuing it at US$306 and the most bearish at US$200 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Accenture'shistorical trends, as next year's 6.9% revenue growth is roughly in line with 8.2% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 14% next year. So it's pretty clear that Accenture is expected to grow slower than similar companies in the same industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Accenture following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Accenture going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Accenture that you need to take into consideration.

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