Accenture plc (NYSE: ACN)

Sector: Technology Industry: Information Technology Services CIK: 0001467373
Market Cap 168.17 Bn
P/B 5.45
P/E 22.09
P/S 2.38
ROIC (Qtr) 19.48
Div Yield % 1.64
Rev 1y % (Qtr) 5.95
Total Debt (Qtr) 8.20 Bn
Debt/Equity (Qtr) 0.27

About

Accenture plc, commonly known as Accenture, is a prominent player in the global professional services industry. The company is renowned for assisting businesses, governments, and other organizations in constructing their digital foundation, optimizing operations, driving revenue growth, and improving citizen services. With a workforce of around 733,000 people as of August 31, 2023, Accenture operates in over 120 countries, delivering a wide range of services to a diverse clientele. Accenture's primary business activities revolve around providing...

Read more

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 12.12B provides robust 1.48x coverage of total debt 8.20B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 9.65B provide 11.45x coverage of short-term debt 842.92M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 12.12B provides exceptional 82.42x coverage of minority interest expenses 147.01M, showing strong core operations.
  • Operating cash flow of 12.12B provides exceptional 45.92x coverage of interest expenses 263.88M, showing strong debt service capability.
  • Robust free cash flow of 11.51B exceeds capital expenditure of 604.42M by 19.05x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 12.12B barely covers its investment activities of (2.14B), with a coverage ratio of -5.66, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 12.12B provides thin coverage of dividend payments of (3.78B) with a -3.20 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 9.65B provide limited coverage of acquisition spending of (1.55B), which is -6.23x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Retained earnings of 22.15B provide limited buffer against comprehensive income items of (1.60B), which is -13.87x, indicating elevated exposure to market risks.
  • Operating cash flow of 12.12B is outpaced by equity issuance of (4.71B) (-2.57 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.55 1.44
EV to Cash from Ops. EV/CFO 13.61 5.63
EV to Debt EV to Debt 20.10 8.06
EV to EBIT EV/EBIT 15.85 -4.05
EV to EBITDA EV/EBITDA 13.08 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 14.32 -1.66
EV to Market Cap EV to Market Cap 0.98 1.35
EV to Revenue EV/Rev 2.33 57.14
Price to Book Value [P/B] P/B 5.45 3.34
Price to Earnings [P/E] P/E 22.09 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.01 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 36.30 0.66
Dividend per Basic Share Div per Share (Qtr) 4.44 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 23.89 6.24
Interest Coverage Int. cover (Qtr) 39.41 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -0.77 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.17 114.15
Dividend Growth (1y) % Div 1y % (Qtr) -17.01 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 2.39 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 3.36 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 4.44 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) 2.56 97.07
EPS Growth (1y) % EPS 1y % (Qtr) 1.33 147.29
FCF Growth (1y) % FCF 1y % (Qtr) 27.13 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.98 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.09 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.30 0.01
Cash Ratio Cash Ratio (Qtr) 0.48 0.66
Current Ratio Curr Ratio (Qtr) 1.41 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.27 0.88
Interest Cover Ratio Int Coverage (Qtr) 39.41 -319.17
Times Interest Earned Times Interest Earned (Qtr) 39.41 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.20 -550.76
EBIT Margin % EBIT Margin % (Qtr) 14.70 -775.74
EBT Margin % EBT Margin % (Qtr) 14.33 -827.89
Gross Margin % Gross Margin % (Qtr) 32.00 24.07
Net Profit Margin % Net Margin % (Qtr) 10.80 -830.34