Intrinsic value of Accenture Cl A - ACN

Previous Close

$161.43

  Intrinsic Value

$99.82

stock screener

  Rating & Target

sell

-38%

Previous close

$161.43

 
Intrinsic value

$99.82

 
Up/down potential

-38%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ACN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.65
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
Revenue, $m
  36,765
  41,030
  45,518
  50,228
  55,156
  60,302
  65,667
  71,254
  77,066
  83,109
  89,389
  95,916
  102,698
  109,747
  117,076
  124,697
  132,627
  140,880
  149,475
  158,429
  167,763
  177,497
  187,654
  198,256
  209,329
  220,897
  232,989
  245,632
  258,856
  272,693
  287,175
Variable operating expenses, $m
 
  34,284
  37,980
  41,857
  45,915
  50,153
  54,570
  59,170
  63,956
  68,931
  74,103
  78,976
  84,561
  90,365
  96,400
  102,675
  109,204
  116,000
  123,077
  130,450
  138,135
  146,150
  154,513
  163,243
  172,360
  181,886
  191,842
  202,252
  213,141
  224,534
  236,459
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  32,133
  34,284
  37,980
  41,857
  45,915
  50,153
  54,570
  59,170
  63,956
  68,931
  74,103
  78,976
  84,561
  90,365
  96,400
  102,675
  109,204
  116,000
  123,077
  130,450
  138,135
  146,150
  154,513
  163,243
  172,360
  181,886
  191,842
  202,252
  213,141
  224,534
  236,459
Operating income, $m
  4,632
  6,746
  7,539
  8,370
  9,241
  10,149
  11,097
  12,084
  13,110
  14,177
  15,286
  16,939
  18,137
  19,382
  20,676
  22,022
  23,423
  24,880
  26,398
  27,979
  29,628
  31,347
  33,141
  35,013
  36,969
  39,012
  41,147
  43,380
  45,715
  48,159
  50,717
EBITDA, $m
  5,434
  7,496
  8,316
  9,176
  10,076
  11,016
  11,996
  13,017
  14,079
  15,183
  16,330
  17,522
  18,762
  20,049
  21,388
  22,780
  24,229
  25,737
  27,307
  28,943
  30,648
  32,426
  34,282
  36,219
  38,242
  40,355
  42,564
  44,874
  47,289
  49,817
  52,463
Interest expense (income), $m
  16
  14
  991
  2,022
  3,104
  4,236
  5,418
  6,651
  7,934
  9,269
  10,657
  12,100
  13,600
  15,158
  16,777
  18,461
  20,212
  22,033
  23,929
  25,904
  27,961
  30,105
  32,342
  34,675
  37,111
  39,654
  42,312
  45,090
  47,994
  51,032
  54,211
Earnings before tax, $m
  4,616
  6,732
  6,548
  6,349
  6,137
  5,914
  5,679
  5,433
  5,176
  4,908
  4,629
  4,839
  4,537
  4,224
  3,899
  3,561
  3,211
  2,847
  2,469
  2,076
  1,667
  1,242
  799
  338
  -142
  -643
  -1,165
  -1,710
  -2,279
  -2,873
  -3,494
Tax expense, $m
  981
  1,818
  1,768
  1,714
  1,657
  1,597
  1,533
  1,467
  1,398
  1,325
  1,250
  1,307
  1,225
  1,141
  1,053
  962
  867
  769
  667
  560
  450
  335
  216
  91
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  3,445
  4,915
  4,780
  4,634
  4,480
  4,317
  4,146
  3,966
  3,779
  3,583
  3,379
  3,532
  3,312
  3,084
  2,846
  2,600
  2,344
  2,078
  1,802
  1,515
  1,217
  906
  583
  247
  -142
  -643
  -1,165
  -1,710
  -2,279
  -2,873
  -3,494

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,130
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,690
  20,712
  22,977
  25,355
  27,842
  30,440
  33,148
  35,969
  38,902
  41,953
  45,123
  48,418
  51,841
  55,400
  59,099
  62,947
  66,949
  71,116
  75,454
  79,974
  84,686
  89,600
  94,727
  100,079
  105,668
  111,508
  117,612
  123,994
  130,669
  137,654
  144,965
Adjusted assets (=assets-cash), $m
  18,560
  20,712
  22,977
  25,355
  27,842
  30,440
  33,148
  35,969
  38,902
  41,953
  45,123
  48,418
  51,841
  55,400
  59,099
  62,947
  66,949
  71,116
  75,454
  79,974
  84,686
  89,600
  94,727
  100,079
  105,668
  111,508
  117,612
  123,994
  130,669
  137,654
  144,965
Revenue / Adjusted assets
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
  1.981
Average production assets, $m
  1,659
  1,846
  2,048
  2,260
  2,482
  2,714
  2,955
  3,206
  3,468
  3,740
  4,023
  4,316
  4,621
  4,939
  5,268
  5,611
  5,968
  6,340
  6,726
  7,129
  7,549
  7,987
  8,444
  8,922
  9,420
  9,940
  10,484
  11,053
  11,649
  12,271
  12,923
Working capital, $m
  2,273
  -2,051
  -2,276
  -2,511
  -2,758
  -3,015
  -3,283
  -3,563
  -3,853
  -4,155
  -4,469
  -4,796
  -5,135
  -5,487
  -5,854
  -6,235
  -6,631
  -7,044
  -7,474
  -7,921
  -8,388
  -8,875
  -9,383
  -9,913
  -10,466
  -11,045
  -11,649
  -12,282
  -12,943
  -13,635
  -14,359
Total debt, $m
  25
  1,611
  3,287
  5,047
  6,887
  8,810
  10,814
  12,901
  15,072
  17,329
  19,675
  22,113
  24,647
  27,280
  30,017
  32,864
  35,826
  38,909
  42,120
  45,465
  48,952
  52,588
  56,382
  60,342
  64,478
  68,800
  73,317
  78,039
  82,979
  88,148
  93,558
Total liabilities, $m
  13,740
  15,327
  17,003
  18,763
  20,603
  22,526
  24,530
  26,617
  28,788
  31,045
  33,391
  35,829
  38,363
  40,996
  43,733
  46,580
  49,542
  52,625
  55,836
  59,181
  62,668
  66,304
  70,098
  74,058
  78,194
  82,516
  87,033
  91,755
  96,695
  101,864
  107,274
Total equity, $m
  8,949
  5,385
  5,974
  6,592
  7,239
  7,914
  8,619
  9,352
  10,115
  10,908
  11,732
  12,589
  13,479
  14,404
  15,366
  16,366
  17,407
  18,490
  19,618
  20,793
  22,018
  23,296
  24,629
  26,021
  27,474
  28,992
  30,579
  32,238
  33,974
  35,790
  37,691
Total liabilities and equity, $m
  22,689
  20,712
  22,977
  25,355
  27,842
  30,440
  33,149
  35,969
  38,903
  41,953
  45,123
  48,418
  51,842
  55,400
  59,099
  62,946
  66,949
  71,115
  75,454
  79,974
  84,686
  89,600
  94,727
  100,079
  105,668
  111,508
  117,612
  123,993
  130,669
  137,654
  144,965
Debt-to-equity ratio
  0.003
  0.300
  0.550
  0.770
  0.950
  1.110
  1.250
  1.380
  1.490
  1.590
  1.680
  1.760
  1.830
  1.890
  1.950
  2.010
  2.060
  2.100
  2.150
  2.190
  2.220
  2.260
  2.290
  2.320
  2.350
  2.370
  2.400
  2.420
  2.440
  2.460
  2.480
Adjusted equity ratio
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,445
  4,915
  4,780
  4,634
  4,480
  4,317
  4,146
  3,966
  3,779
  3,583
  3,379
  3,532
  3,312
  3,084
  2,846
  2,600
  2,344
  2,078
  1,802
  1,515
  1,217
  906
  583
  247
  -142
  -643
  -1,165
  -1,710
  -2,279
  -2,873
  -3,494
Depreciation, amort., depletion, $m
  802
  750
  777
  806
  836
  867
  900
  934
  969
  1,006
  1,044
  583
  625
  667
  712
  758
  807
  857
  909
  963
  1,020
  1,079
  1,141
  1,206
  1,273
  1,343
  1,417
  1,494
  1,574
  1,658
  1,746
Funds from operations, $m
  4,529
  5,664
  5,557
  5,440
  5,316
  5,184
  5,045
  4,900
  4,747
  4,588
  4,423
  4,116
  3,937
  3,751
  3,558
  3,358
  3,150
  2,935
  2,711
  2,479
  2,237
  1,986
  1,725
  1,453
  1,131
  701
  252
  -216
  -705
  -1,215
  -1,748
Change in working capital, $m
  -444
  -213
  -224
  -235
  -246
  -257
  -268
  -279
  -291
  -302
  -314
  -326
  -339
  -352
  -366
  -381
  -396
  -413
  -430
  -448
  -467
  -487
  -508
  -530
  -554
  -578
  -605
  -632
  -661
  -692
  -724
Cash from operations, $m
  4,973
  5,878
  5,782
  5,676
  5,562
  5,441
  5,313
  5,179
  5,038
  4,891
  4,737
  4,442
  4,276
  4,104
  3,925
  3,739
  3,547
  3,348
  3,141
  2,926
  2,704
  2,473
  2,232
  1,983
  1,685
  1,279
  857
  416
  -44
  -523
  -1,024
Maintenance CAPEX, $m
  0
  -224
  -250
  -277
  -305
  -335
  -367
  -399
  -433
  -469
  -505
  -544
  -583
  -625
  -667
  -712
  -758
  -807
  -857
  -909
  -963
  -1,020
  -1,079
  -1,141
  -1,206
  -1,273
  -1,343
  -1,417
  -1,494
  -1,574
  -1,658
New CAPEX, $m
  -516
  -187
  -202
  -212
  -222
  -232
  -241
  -251
  -262
  -272
  -283
  -294
  -305
  -317
  -330
  -343
  -357
  -371
  -387
  -403
  -420
  -438
  -457
  -477
  -498
  -521
  -544
  -569
  -595
  -623
  -652
Cash from investing activities, $m
  -2,234
  -411
  -452
  -489
  -527
  -567
  -608
  -650
  -695
  -741
  -788
  -838
  -888
  -942
  -997
  -1,055
  -1,115
  -1,178
  -1,244
  -1,312
  -1,383
  -1,458
  -1,536
  -1,618
  -1,704
  -1,794
  -1,887
  -1,986
  -2,089
  -2,197
  -2,310
Free cash flow, $m
  2,739
  5,466
  5,330
  5,187
  5,035
  4,874
  4,705
  4,528
  4,343
  4,150
  3,949
  3,605
  3,387
  3,162
  2,928
  2,684
  2,432
  2,170
  1,897
  1,614
  1,320
  1,014
  696
  364
  -19
  -514
  -1,031
  -1,570
  -2,132
  -2,720
  -3,334
Issuance/(repayment) of debt, $m
  -2
  1,589
  1,677
  1,759
  1,841
  1,922
  2,004
  2,087
  2,171
  2,257
  2,346
  2,438
  2,534
  2,633
  2,738
  2,847
  2,962
  3,083
  3,211
  3,345
  3,487
  3,636
  3,794
  3,960
  4,136
  4,321
  4,517
  4,723
  4,940
  5,169
  5,410
Issuance/(repurchase) of shares, $m
  -1,973
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  8
  371
  750
  1,145
  1,595
  2,161
  2,752
  3,369
  4,015
  4,689
  5,395
Cash from financing (excl. dividends), $m  
  -1,992
  1,589
  1,677
  1,759
  1,841
  1,922
  2,004
  2,087
  2,171
  2,257
  2,346
  2,438
  2,534
  2,633
  2,738
  2,847
  2,962
  3,083
  3,211
  3,345
  3,495
  4,007
  4,544
  5,105
  5,731
  6,482
  7,269
  8,092
  8,955
  9,858
  10,805
Total cash flow (excl. dividends), $m
  789
  7,055
  7,007
  6,946
  6,876
  6,797
  6,709
  6,615
  6,514
  6,407
  6,295
  6,043
  5,921
  5,795
  5,665
  5,531
  5,394
  5,253
  5,108
  4,959
  4,815
  5,022
  5,240
  5,470
  5,712
  5,968
  6,238
  6,522
  6,822
  7,138
  7,471
Retained Cash Flow (-), $m
  -1,394
  -563
  -589
  -618
  -647
  -675
  -704
  -733
  -763
  -793
  -824
  -857
  -890
  -925
  -962
  -1,000
  -1,041
  -1,083
  -1,128
  -1,175
  -1,225
  -1,278
  -1,333
  -1,392
  -1,595
  -2,161
  -2,752
  -3,369
  -4,015
  -4,689
  -5,395
Prev. year cash balance distribution, $m
 
  4,127
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  10,619
  6,418
  6,328
  6,229
  6,121
  6,005
  5,882
  5,751
  5,614
  5,471
  5,186
  5,031
  4,870
  4,703
  4,531
  4,353
  4,169
  3,980
  3,784
  3,590
  3,744
  3,907
  4,078
  4,117
  3,807
  3,486
  3,153
  2,808
  2,449
  2,076
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  10,181
  5,875
  5,507
  5,129
  4,745
  4,358
  3,974
  3,595
  3,225
  2,868
  2,463
  2,147
  1,852
  1,579
  1,330
  1,106
  907
  733
  583
  456
  387
  324
  267
  210
  148
  102
  68
  43
  27
  16
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.8
  99.5
  99.0
  98.4
  97.7
  96.8
  95.7
  94.5
  93.2
  91.9

Accenture plc is a professional services company serving clients in various industries and in geographic regions, including North America, Europe and Growth Markets. The Company provides management and technology consulting services. Its segments include Communications, Media and Technology; Financial Services; Health and Public Service; Products, and Resources. The Communications, Media & Technology segment serves communications, electronics, technology, media and entertainment industries. The Financial Services segment serves banking, capital markets and insurance industries. The Health & Public service segment serves healthcare payers and providers, and government departments and agencies, public service organizations, educational institutions and non-profit organizations. The Products segment serves a set of interconnected consumer-relevant industries. The Resources segment serves chemicals, energy, forest products, metals and mining, utilities and related industries.

FINANCIAL RATIOS  of  Accenture Cl A (ACN)

Valuation Ratios
P/E Ratio 29.8
Price to Sales 2.8
Price to Book 11.5
Price to Tangible Book
Price to Cash Flow 20.6
Price to Free Cash Flow 23
Growth Rates
Sales Growth Rate 5.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.8%
Cap. Spend. - 3 Yr. Gr. Rate 9.9%
Financial Strength
Quick Ratio 1377
Current Ratio 0.1
LT Debt to Equity 0.2%
Total Debt to Equity 0.3%
Interest Coverage 290
Management Effectiveness
Return On Assets 16%
Ret/ On Assets - 3 Yr. Avg. 18.1%
Return On Total Capital 41.6%
Ret/ On T. Cap. - 3 Yr. Avg. 50.9%
Return On Equity 41.7%
Return On Equity - 3 Yr. Avg. 51.1%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 30%
Gross Margin - 3 Yr. Avg. 29.8%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 16.1%
Operating Margin 12.6%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 12.6%
Pre-Tax Margin - 3 Yr. Avg. 14%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 10.2%
Effective Tax Rate 21.3%
Eff/ Tax Rate - 3 Yr. Avg. 23.1%
Payout Ratio 45.5%

ACN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACN stock intrinsic value calculation we used $36765 million for the last fiscal year's total revenue generated by Accenture Cl A. The default revenue input number comes from 2017 income statement of Accenture Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ACN stock valuation model: a) initial revenue growth rate of 11.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ACN is calculated based on our internal credit rating of Accenture Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Accenture Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ACN stock the variable cost ratio is equal to 83.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ACN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 61.5% for Accenture Cl A.

Corporate tax rate of 27% is the nominal tax rate for Accenture Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ACN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ACN are equal to 4.5%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Accenture Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ACN is equal to -5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $8949 million for Accenture Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 643.086 million for Accenture Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Accenture Cl A at the current share price and the inputted number of shares is $103.8 billion.

Management's discussion and analysis

Revenues are driven by the ability of our executives to secure new contracts and to deliver services and solutions that add value relevant to our clients’ current needs and challenges. The level of revenues we achieve is based on our ability to deliver market-leading service offerings and to deploy skilled teams of professionals quickly and on a global basis.
Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. There continues to be significant volatility and economic and geopolitical uncertainty in many markets around the world, which may impact our business. We continue to monitor the impact of this volatility and uncertainty and seek to manage our costs in order to respond to changing conditions. There also continues to be significant volatility in foreign currency exchange rates. The majority of our net revenues are denominated in currencies other than the U.S. dollar, including the Euro and the U.K. pound. Unfavorable fluctuations in foreign currency exchange rates have had and could have in the future a material effect on our financial results.
Revenues before reimbursements (“net revenues”) for the fourth quarter of fiscal 2016 increased 8% in U.S. dollars and 9% in local currency compared to the fourth quarter of fiscal 2015. Net revenues for fiscal 2016 increased 6% in U.S. dollars and 10% in local currency compared to fiscal 2015. Demand for our services and solutions continued to be strong, resulting in growth across all areas of our business. During the fourth quarter of fiscal 2016, revenue growth in local currency was significant in Products and strong in Health & Public Service and Financial Services. Communications, Media & Technology revenue growth in local currency was solid, while Resources was flat. Revenue growth in local currency was very strong in consulting and solid in outsourcing during the fourth quarter of fiscal 2016. While the business environment remained competitive, we experienced pricing improvement in several areas of our business in fiscal 2016. We use the term “pricing” to mean the contract profitability or margin on the work that we sell.
In our consulting business, net revenues for the fourth quarter of fiscal 2016 increased 11% in U.S. dollars and 13% in local currency compared to the fourth quarter of fiscal 2015. Net consulting revenues for fiscal 2016 increased 10% in U.S. dollars and 15% in local currency compared to fiscal 2015. Consulting revenue growth in local currency in the fourth quarter of fiscal 2016 was led by very significant growth in Products, as well as strong growth in Financial Services, Health & Public Service and Communications, Media & Technology, while Resources had a slight decline. We continue to experience growing demand for digital-related services and assisting clients with the adoption of new technologies. In addition, clients continued to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to integrate their global operations and grow and transform their businesses. Compared to fiscal 2015, we continued to provide a greater proportion of systems integration consulting through use of lower cost resources in our Global Delivery Network. This trend has resulted in work volume growing faster than revenue in our systems integration business, and we expect this trend to continue.
In our outsourcing business, net revenues for the fourth quarter of fiscal 2016 increased 4% in U.S. dollars and 6% in local currency compared to the fourth quarter of fiscal 2015. Net outsourcing revenues for fiscal 2016 increased 1% in U.S. dollars and 6% in local currency compared to fiscal 2015. Outsourcing revenue growth in local currency in the fourth quarter of fiscal 2016 was driven by very strong growth in Health & Public Service as well as solid growth in Products and Financial Services. We are experiencing growing demand to assist clients with cloud enablement and the operation and maintenance of digital-related services. In addition, clients continue to be focused on transforming 
their operations to improve effectiveness and save costs. Compared to fiscal 2015, we continued to provide a greater proportion of application outsourcing through use of lower-cost resources in our Global Delivery Network.
As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange rate fluctuations. If the U.S. dollar strengthens against other currencies, resulting in unfavorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be lower. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be higher. When compared to the same periods in fiscal 2015, the U.S. dollar strengthened against many currencies during the fourth quarter and fiscal year ended August 31, 2016, resulting in unfavorable currency translation and U.S. dollar revenue growth that was approximately 2% and 5% lower, respectively, than our revenue growth in local currency. Assuming that exchange rates stay within recent ranges for fiscal 2017, we estimate that our full fiscal 2017 revenue growth in U.S. dollars will be approximately equal to our revenue growth in local currency.
The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs. Cost of services is primarily driven by the cost of client-service personnel, which consists mainly of compensation, subcontractor and other personnel costs, and non-payroll costs on outsourcing contracts. Cost of services includes a variety of activities such as: contract delivery; recruiting and training; software development; and integration of acquisitions. Sales and marketing costs are driven primarily by: compensation costs for business development activities; marketing- and advertising-related activities; and certain acquisition-related costs. General and administrative costs primarily include costs for non-client-facing personnel, information systems and office space.
Utilization for the fourth quarter of fiscal 2016 was 92%, up from 91% in the third quarter of fiscal 2016 and 90% in the fourth quarter of fiscal 2015. We continue to hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our operating expenses. Based on current and projected future demand, we have increased our headcount, the majority of which serve our clients, to approximately 384,000 as of August 31, 2016, compared to approximately 358,000 as of August 31, 2015. The year-over-year increase in our headcount reflects an overall increase in demand for our services and solutions, as well as headcount added in connection with acquisitions. Annualized attrition, excluding involuntary terminations, for the fourth quarter of fiscal 2016 was 16%, up from 15%in the third quarter of fiscal 2016 and 14% in the fourth quarter of fiscal 2015. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as means to keep our supply of skills and resources in balance with changes in client demand. In addition, we adjust compensation in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees. For the majority of our personnel, compensation increases for fiscal 2016 became effective December 1, 2015. We strive to adjust pricing and/or the mix of resources to reduce the impact of compensation increases on our gross margin. Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to: keep our supply of skills and resources in balance with changes in the types or amounts of services and solutions clients are demanding; recover increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate and utilize new employees.
Gross margin (Net revenues less Cost of services before reimbursable expenses as a percentage of Net revenues) for the fourth quarter of fiscal 2016 was 31.3%, compared with 31.7% for the fourth quarter of fiscal 2015. Gross margin for fiscal 2016was 31.3%, compared with 31.6% for fiscal 2015. The reduction in gross margin for fiscal 2016 was principally due to higher labor costs and higher costs associated with acquisition activities compared to fiscal 2015.
Sales and marketing and General and administrative costs as a percentage of net revenues were 17.2% for the fourth quarter of fiscal 2016, compared with 17.9% for the fourth quarter of fiscal 2015. Sales and marketing and General and administrative costs as a percentage of net revenues were 16.6% for fiscal 2016, compared with 17.1% for fiscal 2015. We continuously monitor these costs and implement cost-management actions, as appropriate. For fiscal 2016 compared to fiscal 2015, Sales and marketing costs as a percentage of net revenues decreased 40 basis points principally due to improved operational efficiency in our business development activities, and General and administrative costs as a percentage of net revenues decreased 10 basis points.
Operating expenses in fiscal 2015 included a Pension settlement charge of $64 million related to lump sum cash payments made from our U.S. defined benefit pension plan to former employees who elected to receive such payments. For additional information, see Note 10 (Retirement and Profit Sharing Plans) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
Operating margin (Operating income as a percentage of Net revenues) for the fourth quarter of fiscal 2016 was 14.1%, compared with 13.9% for the fourth quarter of fiscal 2015. Operating margin for fiscal 2016 was 14.6%, compared with 14.3% for fiscal 2015. The Pension settlement charge of $64 million recorded in fiscal 2015 decreased operating 
margin by 20 basis points for fiscal 2015. Excluding the effect of the Pension settlement charge, operating margin for fiscal 2015 would have been 14.5%.
During fiscal 2016, we recorded a $548 million gain on sale of business and $56 million in taxes related to the divestiture of our Navitaire business, as well as a $301 million gain on sale of business and $48 million in taxes related to the partial divestiture of our Duck Creek business. For additional information, see Note 5 (Business Combinations and Divestitures) to our Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.”
The effective tax rate for fiscal 2016 was 22.4%, compared with 25.8% for fiscal 2015. Absent the $849 million Gain on sale of businesses and related $104 million in taxes recorded during fiscal 2016, our effective tax rate for fiscal 2016 would have been 24.2%. Absent the $64 million Pension settlement charge and related $25 million in taxes recorded during fiscal 2015, our effective tax rate for fiscal 2015 would have been 26.0%.
Diluted earnings per share were $6.45 for fiscal 2016, compared with $4.76 for fiscal 2015. The Gain on sale of businesses, net of taxes, recorded during fiscal 2016 increased Diluted earnings per share by $1.11 in fiscal 2016. The Pension settlement charge, net of taxes, recorded during fiscal 2015 decreased Diluted earnings per share by $0.06 in fiscal 2015. Excluding these impacts, Diluted earnings per share would have been $5.34 and $4.82 for fiscal 2016 and 2015, respectively.
We have presented Operating income, operating margin, effective tax rate and Diluted earnings per share excluding the impacts of the fiscal 2016 Gain on sale of businesses and the fiscal 2015 Pension settlement charge, as we believe doing so facilitates understanding as to both the impacts of these items and our operating performance in comparison to the prior period.
Our Operating income and Diluted earnings per share are affected by currency exchange rate fluctuations on revenues and costs. Most of our costs are incurred in the same currency as the related net revenues. Where practical, we seek to manage foreign currency exposure for costs not incurred in the same currency as the related net revenues, such as the cost of our Global Delivery Network, by using currency protection provisions in our customer contracts and through our hedging programs. We seek to manage our costs, taking into consideration the residual positive and negative effects of changes in foreign exchange rates on those costs.

[Source: Form 10-K dated 2016-10-28]

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Financial statements of ACN
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