John Fowler, Big4.com
26 October 26, 2010
(blog) Accenture (NYSE:ACN) has been riding high on the stock markets ever since its Q4-2010 quarter and full year announcements of financial results. The stock zoomed up to about $44 on the news and hasn’t sold off since then, only moving up to higher levels to cross $45 in recent days. ACN is trading at its historical highs, and triple that of the $15 level it debuted on the NYSE in 2002. Long term shareholders have been amply rewarded with spectacular returns over this time. And even as late as mid-2006, the stock could be bough for $27, with good returns for even medium-term holders.
Wall Street analysts (16 of those who follow the stock) continue to be bullish on the stock, the mean consensus price is $49.50, just about $5 from where it is now, but there are still those who peg a $55 price on the high side. Of the 22 analysts who provide a rating, 7 rate it Strong Buy, 10 a Buy, 5 a Hold and none a Sell.
For the next quarter ending November 2010 or Q1-2011, the consensus revenue is $5.681 billion, the consensus EPS is 74 cents and gross margin is holding strong at 33%. For the full year ending August 2011 or FY-2011, the consensus revenue is $23.050 billion, the consensus EPS is $3.03 and gross margin is expected at 33%. For the year FY 2011, Accenture is expected to have $5.52 in cash, which means that only $40 or so of the stock price is attributable to future earnings, the balance is locked away in solid current assets.
Of the 637 million shares, Accenture SCA, a subsidiary of Accenture, Ltd., and a private corporation based in Luxembourg holds 324 million shares, leaving the float at 311 million shares or so.
Credit Suisse in a recent analyst report sounds a bit about the new CEO, but not that much out of line with current management philosophy. The company provided a great future outlook in its recent earnings call, and it looks like both Consulting and Outsourcing areas are firing on all cylinders.
All put together, this is a great company with excellent and assertive management, terrific operating fundamentals and loads of cash. We have been long time fans, and think with the global economy improving, especially outside the US, Accenture is poised to produce awesome results with subsequent upside even from these levels. (blog)