Intrinsic value of Accenture Cl A - ACN

Previous Close

$164.89

  Intrinsic Value

$63.36

stock screener

  Rating & Target

str. sell

-62%

Previous close

$164.89

 
Intrinsic value

$63.36

 
Up/down potential

-62%

 
Rating

str. sell

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

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 102.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  38,861
  41,048
  43,334
  45,721
  48,217
  50,828
  53,558
  56,415
  59,406
  62,538
  65,817
  69,252
  72,852
  76,624
  80,578
  84,723
  89,069
  93,627
  98,406
  103,420
  108,679
  114,196
  119,984
  126,058
  132,431
  139,120
  146,138
  153,505
  161,236
  169,351
Variable operating expenses, $m
  33,469
  35,325
  37,264
  39,290
  41,408
  43,622
  45,939
  48,363
  50,900
  53,557
  55,839
  58,753
  61,807
  65,008
  68,362
  71,879
  75,566
  79,432
  83,487
  87,741
  92,203
  96,883
  101,794
  106,947
  112,354
  118,028
  123,983
  130,233
  136,792
  143,677
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
  33,469
  35,325
  37,264
  39,290
  41,408
  43,622
  45,939
  48,363
  50,900
  53,557
  55,839
  58,753
  61,807
  65,008
  68,362
  71,879
  75,566
  79,432
  83,487
  87,741
  92,203
  96,883
  101,794
  106,947
  112,354
  118,028
  123,983
  130,233
  136,792
  143,677
Operating income, $m
  5,391
  5,723
  6,069
  6,431
  6,810
  7,206
  7,619
  8,053
  8,506
  8,981
  9,978
  10,499
  11,045
  11,617
  12,216
  12,844
  13,503
  14,194
  14,919
  15,679
  16,476
  17,313
  18,190
  19,111
  20,077
  21,091
  22,155
  23,272
  24,444
  25,675
EBITDA, $m
  6,459
  6,822
  7,202
  7,599
  8,014
  8,448
  8,902
  9,377
  9,874
  10,394
  10,939
  11,510
  12,108
  12,735
  13,393
  14,081
  14,804
  15,561
  16,356
  17,189
  18,063
  18,980
  19,942
  20,952
  22,011
  23,122
  24,289
  25,513
  26,798
  28,147
Interest expense (income), $m
  16
  15
  455
  914
  1,393
  1,894
  2,418
  2,965
  3,538
  4,137
  4,764
  5,421
  6,109
  6,829
  7,584
  8,375
  9,205
  10,074
  10,986
  11,941
  12,944
  13,995
  15,098
  16,256
  17,470
  18,743
  20,080
  21,483
  22,955
  24,500
  26,121
Earnings before tax, $m
  5,376
  5,268
  5,155
  5,038
  4,916
  4,788
  4,654
  4,515
  4,369
  4,217
  4,557
  4,390
  4,215
  4,032
  3,841
  3,640
  3,429
  3,209
  2,977
  2,735
  2,481
  2,214
  1,935
  1,642
  1,334
  1,011
  673
  317
  -56
  -447
Tax expense, $m
  1,452
  1,422
  1,392
  1,360
  1,327
  1,293
  1,257
  1,219
  1,180
  1,138
  1,230
  1,185
  1,138
  1,089
  1,037
  983
  926
  866
  804
  738
  670
  598
  522
  443
  360
  273
  182
  86
  0
  0
Net income, $m
  3,925
  3,845
  3,763
  3,678
  3,588
  3,495
  3,398
  3,296
  3,189
  3,078
  3,327
  3,205
  3,077
  2,944
  2,804
  2,657
  2,503
  2,342
  2,174
  1,997
  1,811
  1,616
  1,412
  1,198
  974
  738
  491
  232
  -56
  -447

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  23,988
  25,339
  26,749
  28,223
  29,764
  31,375
  33,061
  34,824
  36,670
  38,603
  40,628
  42,748
  44,970
  47,299
  49,740
  52,298
  54,981
  57,794
  60,745
  63,839
  67,086
  70,491
  74,064
  77,814
  81,748
  85,876
  90,209
  94,756
  99,529
  104,538
Adjusted assets (=assets-cash), $m
  23,988
  25,339
  26,749
  28,223
  29,764
  31,375
  33,061
  34,824
  36,670
  38,603
  40,628
  42,748
  44,970
  47,299
  49,740
  52,298
  54,981
  57,794
  60,745
  63,839
  67,086
  70,491
  74,064
  77,814
  81,748
  85,876
  90,209
  94,756
  99,529
  104,538
Revenue / Adjusted assets
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
  1.620
Average production assets, $m
  5,674
  5,993
  6,327
  6,675
  7,040
  7,421
  7,819
  8,237
  8,673
  9,130
  9,609
  10,111
  10,636
  11,187
  11,764
  12,370
  13,004
  13,669
  14,367
  15,099
  15,867
  16,673
  17,518
  18,404
  19,335
  20,311
  21,336
  22,412
  23,541
  24,725
Working capital, $m
  -1,593
  -1,683
  -1,777
  -1,875
  -1,977
  -2,084
  -2,196
  -2,313
  -2,436
  -2,564
  -2,698
  -2,839
  -2,987
  -3,142
  -3,304
  -3,474
  -3,652
  -3,839
  -4,035
  -4,240
  -4,456
  -4,682
  -4,919
  -5,168
  -5,430
  -5,704
  -5,992
  -6,294
  -6,611
  -6,943
Total debt, $m
  766
  1,539
  2,346
  3,189
  4,070
  4,992
  5,956
  6,965
  8,021
  9,126
  10,284
  11,497
  12,768
  14,100
  15,496
  16,960
  18,494
  20,103
  21,791
  23,561
  25,418
  27,366
  29,410
  31,555
  33,805
  36,166
  38,645
  41,246
  43,976
  46,841
Total liabilities, $m
  13,721
  14,494
  15,301
  16,144
  17,025
  17,947
  18,911
  19,919
  20,975
  22,081
  23,239
  24,452
  25,723
  27,055
  28,451
  29,915
  31,449
  33,058
  34,746
  36,516
  38,373
  40,321
  42,365
  44,509
  46,760
  49,121
  51,600
  54,200
  56,930
  59,796
Total equity, $m
  10,267
  10,845
  11,449
  12,079
  12,739
  13,429
  14,150
  14,905
  15,695
  16,522
  17,389
  18,296
  19,247
  20,244
  21,289
  22,384
  23,532
  24,736
  25,999
  27,323
  28,713
  30,170
  31,700
  33,304
  34,988
  36,755
  38,609
  40,556
  42,598
  44,742
Total liabilities and equity, $m
  23,988
  25,339
  26,750
  28,223
  29,764
  31,376
  33,061
  34,824
  36,670
  38,603
  40,628
  42,748
  44,970
  47,299
  49,740
  52,299
  54,981
  57,794
  60,745
  63,839
  67,086
  70,491
  74,065
  77,813
  81,748
  85,876
  90,209
  94,756
  99,528
  104,538
Debt-to-equity ratio
  0.070
  0.140
  0.200
  0.260
  0.320
  0.370
  0.420
  0.470
  0.510
  0.550
  0.590
  0.630
  0.660
  0.700
  0.730
  0.760
  0.790
  0.810
  0.840
  0.860
  0.890
  0.910
  0.930
  0.950
  0.970
  0.980
  1.000
  1.020
  1.030
  1.050
Adjusted equity ratio
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,925
  3,845
  3,763
  3,678
  3,588
  3,495
  3,398
  3,296
  3,189
  3,078
  3,327
  3,205
  3,077
  2,944
  2,804
  2,657
  2,503
  2,342
  2,174
  1,997
  1,811
  1,616
  1,412
  1,198
  974
  738
  491
  232
  -56
  -447
Depreciation, amort., depletion, $m
  1,068
  1,100
  1,133
  1,168
  1,204
  1,242
  1,282
  1,324
  1,368
  1,413
  961
  1,011
  1,064
  1,119
  1,176
  1,237
  1,300
  1,367
  1,437
  1,510
  1,587
  1,667
  1,752
  1,840
  1,933
  2,031
  2,134
  2,241
  2,354
  2,473
Funds from operations, $m
  4,992
  4,945
  4,896
  4,846
  4,793
  4,737
  4,680
  4,620
  4,557
  4,491
  4,288
  4,216
  4,141
  4,062
  3,980
  3,894
  3,804
  3,709
  3,610
  3,507
  3,398
  3,284
  3,164
  3,039
  2,907
  2,769
  2,625
  2,473
  2,298
  2,026
Change in working capital, $m
  -86
  -90
  -94
  -98
  -102
  -107
  -112
  -117
  -123
  -128
  -134
  -141
  -148
  -155
  -162
  -170
  -178
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -317
  -333
Cash from operations, $m
  5,078
  5,035
  4,990
  4,943
  4,895
  4,844
  4,792
  4,737
  4,680
  4,620
  4,422
  4,357
  4,288
  4,217
  4,142
  4,064
  3,982
  3,896
  3,806
  3,712
  3,613
  3,510
  3,401
  3,288
  3,169
  3,043
  2,912
  2,775
  2,615
  2,358
Maintenance CAPEX, $m
  -535
  -567
  -599
  -633
  -668
  -704
  -742
  -782
  -824
  -867
  -913
  -961
  -1,011
  -1,064
  -1,119
  -1,176
  -1,237
  -1,300
  -1,367
  -1,437
  -1,510
  -1,587
  -1,667
  -1,752
  -1,840
  -1,933
  -2,031
  -2,134
  -2,241
  -2,354
New CAPEX, $m
  -319
  -319
  -334
  -349
  -364
  -381
  -399
  -417
  -437
  -457
  -479
  -502
  -526
  -551
  -577
  -605
  -635
  -665
  -698
  -732
  -768
  -806
  -845
  -887
  -931
  -976
  -1,025
  -1,075
  -1,129
  -1,185
Cash from investing activities, $m
  -854
  -886
  -933
  -982
  -1,032
  -1,085
  -1,141
  -1,199
  -1,261
  -1,324
  -1,392
  -1,463
  -1,537
  -1,615
  -1,696
  -1,781
  -1,872
  -1,965
  -2,065
  -2,169
  -2,278
  -2,393
  -2,512
  -2,639
  -2,771
  -2,909
  -3,056
  -3,209
  -3,370
  -3,539
Free cash flow, $m
  4,224
  4,148
  4,057
  3,962
  3,863
  3,759
  3,651
  3,538
  3,419
  3,295
  3,030
  2,894
  2,752
  2,603
  2,446
  2,282
  2,110
  1,930
  1,741
  1,543
  1,336
  1,118
  889
  649
  398
  134
  -144
  -434
  -755
  -1,181
Issuance/(repayment) of debt, $m
  741
  773
  807
  843
  881
  922
  964
  1,009
  1,056
  1,106
  1,158
  1,213
  1,271
  1,332
  1,396
  1,464
  1,535
  1,609
  1,688
  1,770
  1,857
  1,948
  2,044
  2,145
  2,250
  2,361
  2,478
  2,601
  2,730
  2,865
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  117
  406
  710
  1,029
  1,363
  1,715
  2,098
  2,591
Cash from financing (excl. dividends), $m  
  741
  773
  807
  843
  881
  922
  964
  1,009
  1,056
  1,106
  1,158
  1,213
  1,271
  1,332
  1,396
  1,464
  1,535
  1,609
  1,688
  1,770
  1,857
  1,948
  2,161
  2,551
  2,960
  3,390
  3,841
  4,316
  4,828
  5,456
Total cash flow (excl. dividends), $m
  4,965
  4,920
  4,864
  4,805
  4,744
  4,681
  4,615
  4,547
  4,475
  4,401
  4,188
  4,107
  4,023
  3,934
  3,842
  3,746
  3,645
  3,540
  3,429
  3,314
  3,193
  3,066
  3,050
  3,200
  3,358
  3,524
  3,698
  3,881
  4,074
  4,276
Retained Cash Flow (-), $m
  -557
  -578
  -604
  -631
  -659
  -690
  -721
  -755
  -790
  -827
  -866
  -908
  -951
  -997
  -1,045
  -1,095
  -1,148
  -1,204
  -1,263
  -1,325
  -1,389
  -1,458
  -1,529
  -1,605
  -1,684
  -1,767
  -1,854
  -1,946
  -2,098
  -2,591
Prev. year cash balance distribution, $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 flow adjustment, $m
  809
  855
  903
  953
  1,006
  1,061
  1,118
  1,178
  1,241
  1,307
  1,376
  1,448
  1,524
  1,603
  1,686
  1,773
  1,864
  1,960
  2,060
  2,165
  2,275
  2,391
  2,512
  2,640
  2,773
  2,913
  3,061
  3,215
  3,377
  3,547
Cash available for distribution, $m
  4,408
  4,342
  4,260
  4,174
  4,085
  3,991
  3,894
  3,792
  3,685
  3,574
  3,322
  3,200
  3,072
  2,938
  2,798
  2,651
  2,497
  2,335
  2,166
  1,989
  1,803
  1,608
  1,521
  1,595
  1,674
  1,757
  1,844
  1,935
  1,975
  1,685
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
  4,226
  3,975
  3,707
  3,437
  3,166
  2,897
  2,631
  2,370
  2,117
  1,873
  1,577
  1,365
  1,168
  986
  821
  674
  543
  430
  334
  253
  186
  133
  100
  81
  65
  51
  40
  30
  22
  13
Current shareholders' claim on cash, %
  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
  100.0
  100.0
  100.0
  99.8
  99.6
  99.3
  99.0
  98.5
  98.0
  97.4

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 30.4
Price to Sales 2.9
Price to Book 11.7
Price to Tangible Book
Price to Cash Flow 21.1
Price to Free Cash Flow 23.5
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 5.7% 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 86.2%.

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 59.4% 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 2.2%.

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 14.6%.

Life of production assets of 10 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 -4.1%. 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 - $9710 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 620 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 $102.2 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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