Key takeaways
View moreAccenture appears moderately undervalued based on its strong profitability metrics (ROA, ROE, ROIC) significantly outperforming industry averages, while its valuation multiples (EV/EBITDA, EV/Sales) are below industry averages. The company's leadership in Gen AI and potential for large transformational deals offer substantial growth opportunities, which may not be fully reflected in the current valuation.
- Accenture's profitability ratios (ROA, ROE, ROIC) are significantly higher than industry averages, indicating strong underlying financial health, but declining margins are a concern.
- Revenue growth is decelerating, with the most recent quarterly revenue at $16.66 billion, down from $17.69 billion in the previous quarter, signaling potential challenges in maintaining high growth rates.
- Long-term debt has increased, raising the debt-to-equity ratio from 16.59% to 27.56%, which could impact future financial flexibility.
- Gen AI is emerging as a significant growth driver, with $1.4 billion in new bookings and approximately $600 million in revenue, positioning Accenture as a leader in this space.
- Uncertainty in the federal government sector poses a risk to revenue, particularly in the second half of the fiscal year, as highlighted in the recent earnings call.
- Accenture's Enterprise Value to EBITDA ratio of 18.43 is lower than the industry average of 70.78, suggesting potential undervaluation relative to peers.
- Accenture has underperformed the Technology Select Sector SPDR Fund (XLK) over the past three years, with a return of 11.5% compared to XLK's 69.98%, indicating a need for improved performance relative to market benchmarks.
- The company's strategic focus on large transformational deals and cost management will be critical for navigating market uncertainty and sustaining growth, as emphasized in the earnings call.
- Accenture's current ratio of 1.48 is lower than the industry average of 2.31, suggesting that Accenture may have less liquidity compared to its peers.
Evaluation summary
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Company Overview:
- Accenture Plc (ACN) is a global professional services company providing services and solutions in Strategy & Consulting, Technology, Operations, Industry X, and Song. It helps businesses and governments build their digital core, optimize operations, and accelerate revenue growth.
- Accenture's services include consulting, managed services, technology integration, and industry-specific solutions. The company operates through three geographical segments: North America, EMEA (Europe, Middle East, and Africa), and Growth Markets.
- The company's major clients span various industries, including financial services, health, public sector, communications, and resources.
- For comparative analysis, Accenture is benchmarked against the Technology Select Sector SPDR Fund (XLK) and evaluated against industry peers Concentrix Corp. (CNXC) and Globant SA (GLOB).
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Financial Performance:
- Accenture's revenue has shown a decelerating growth trend. The most recent quarterly revenue (2025-02-28) was $16.66 billion, compared to $17.69 billion in the previous quarter (2024-11-30).
- Gross profit margin has decreased from 33.45% in 2024-05-31 to 29.85% in 2025-02-28. Similarly, the EBITDA margin has declined from 18.61% to 15.65% over the same period.
- Net income decreased from $1.98 billion in 2024-05-31 to $1.79 billion in 2025-02-28.
- Accenture's Return on Assets (ROA) is 13.82%, Return on Equity (ROE) is 27.26%, and Return on Invested Capital (ROIC) is 23.29%. These profitability ratios are significantly higher than the industry averages of -9.18%, -4.79%, and -16.80%, respectively.
- The recent earnings call highlighted that Accenture delivered strong Q2 FY25 results, growing 8.5% in local currency. However, analysts raised concerns about the margin outlook and the impact of rising costs.
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Operational Efficiency:
- Total current assets increased from $21.08 billion in 2024-05-31 to $25.31 billion in 2025-02-28, while total current liabilities decreased slightly from $18.21 billion to $17.13 billion.
- Working capital increased significantly from $2.87 billion in 2024-05-31 to $8.18 billion in 2025-02-28.
- Net operating cash flow increased from $3.14 billion in 2024-05-31 to $2.85 billion in 2025-02-28. Net investing cash flow remained negative, at -$407.28 million in 2025-02-28, due to acquisitions. Net financing cash flow was also negative, at -$2.21 billion, primarily due to cash dividends paid ($928.11 million) and changes in capital stock (-$1.24 billion).
- Free cash flow to equity was $2.68 billion in 2025-02-28, with a free cash flow margin of 0.16.
- Capital expenditure was $170.81 million in the most recent quarter, while depreciation, depletion, and amortization were $365.1 million.
- Accenture returned $928.11 million in cash dividends and repurchased shares worth $1.24 billion in the latest quarter.
- The current ratio is 1.48, which is lower than the industry average of 2.31, indicating potentially lower liquidity compared to peers. The quick ratio is also 1.48, the same as the current ratio, because inventories are zero.
- The debt-to-equity ratio increased from 16.59% in 2024-05-31 to 27.56% in 2025-02-28, indicating increased leverage.
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Growth Opportunities:
- Accenture is focused on large-scale transformations and reinvention through new ways of working, tech, data, and AI.
- The company is investing in its data and AI workforce, aiming for 80,000 by the end of FY26.
- Key acquisitions include AOX, Staufen AG, IQT Group, Halfspace, and Altus Consulting, enhancing capabilities in Industry X and supply chain.
- Accenture is partnering with clients like Telstra and Repsol to accelerate their use of data and AI.
- Gen AI is a significant growth area, with $1.4 billion in new bookings and approximately $600 million in revenue in the recent quarter.
- The earnings call highlighted that Accenture is deploying over $250 million primarily across six strategic acquisitions and investing in people with approximately 15 million training hours.
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Recent Developments and Market Sentiment:
- The recent earnings call (2025-03-20) revealed that federal government uncertainty is a key risk due to slowdowns in procurement and contract reviews.
- Gen AI is a growing revenue stream, with significant bookings and revenue growth, positioning Accenture as a leader in this space.
- Large transformational deals are driving growth, which is a key strategy for navigating market uncertainty and sustaining growth.
- Analysts are concerned about the demand environment outside of the U.S. Federal sector, the margin outlook, and the revenue at risk in the federal business.
- Management expressed confidence in their strategy and ability to navigate a changing market, emphasizing agility, client relationships, and leadership in Gen AI.
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Risks and Threats:
- Accenture faces risks related to adverse economic and geopolitical conditions impacting client demand and spending, as highlighted in the SEC filings.
- The company's inability to adapt services/solutions to evolving client needs and technological changes is a significant risk.
- Risks and uncertainties related to the development and use of AI technologies are also a concern.
- The earnings call highlighted that the slowdown in federal procurement and contract reviews poses a significant risk to Accenture's revenue, particularly in the second half of the fiscal year.
- SEC filings mention ongoing legal matters, including a class action lawsuit related to a data security incident and a civil and criminal investigation by the U.S. Department of Justice.
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Valuation Analysis:
- The Enterprise Value to EBITDA ratio is 18.43, and the Enterprise Value to Sales ratio is 3.30.
- Compared to the industry average, Accenture's valuation metrics are lower (Industry average Enterprise Value to EBITDA is 70.78, and Enterprise Value to Sales is 17.32), suggesting that Accenture may be undervalued relative to its peers.
- Potential catalysts include continued growth in Gen AI and successful execution of large transformational deals.
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Price Performance:
- Accenture's stock price has fluctuated between $279.23 and $323.21 from 2025-03-27 to 2025-05-23.
- Accenture Plc (ACN) has generally underperformed the Technology Select Sector SPDR Fund (XLK) over the past three years. While ACN showed a slight overperformance in the 1-year and 1-week periods, it significantly underperformed in the YTD, 3-month, 6-month, 2-year, and 3-year periods. For instance, over the last three years, ACN returned 11.5% compared to XLK's 69.98%.
- Compared to peers, Accenture Plc (ACN) has outperformed both Concentrix Corp. (CNXC) and Globant SA (GLOB) over the past year, with returns of 5.83% compared to -8.38% and -38.93%, respectively. However, year-to-date, Accenture Plc (ACN) has underperformed Concentrix Corp. (CNXC) but outperformed Globant SA (GLOB).
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Future Outlook:
- Management expects revenue growth to be 5% to 7% in local currency for FY25, with an inorganic contribution of a bit more than 3%.
- Operating margin is expected to be 15.6% to 15.7%.
- Full-year diluted EPS is projected to be $12.55 to $12.79, a 5% to 7% growth over adjusted FY24.
- The guidance reflects an elevated level of uncertainty, including potential impacts from the federal business.
- The earnings call highlighted that Accenture is focused on pricing, contract delivery, and operational efficiency to manage margins.
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Summary:
- Accenture is a leading global professional services company with strong profitability ratios, but faces challenges related to decelerating revenue growth and declining margins.
- Strengths: Strong profitability ratios (ROA, ROE, ROIC) compared to industry averages, significant free cash flow generation, and leadership in Gen AI.
- Weaknesses: Decelerating revenue growth, declining margins, and increasing long-term debt.
- Opportunities: Growth in Gen AI, strategic acquisitions, and large transformational deals.
- Threats: Federal government uncertainty, adverse economic and geopolitical conditions, and intense competition.
- Accenture's financial health is generally stable, but requires monitoring of revenue growth, profitability margins, and debt levels.
- Critical factors for future performance include successful execution of large transformational deals, effective cost management, and navigating the uncertainty in the federal business.
- Areas requiring further monitoring include accounts receivable turnover, debt-to-equity ratio, and free cash flow margin.
- Overall, Accenture presents a mixed investment profile. While it has strong fundamentals and growth opportunities, it also faces significant risks and challenges. The company's valuation metrics are lower than the industry average, suggesting it may be undervalued. However, its underperformance compared to benchmarks and the uncertainty in the federal business warrant caution.
Price history
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Fundamentals
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Insights
- Revenue growth is decelerating, and profitability is declining, indicating potential challenges in maintaining high growth rates and controlling costs.
- Long-term debt has significantly increased, which could impact future financial flexibility and increase interest expenses.
- Despite these challenges, Accenture's profitability ratios remain significantly higher than the industry average, and the company maintains an adequate liquidity position.
- The company's growth strategy, which includes strategic acquisitions, is reflected in the increasing intangible assets and negative net investing cash flow.
- Key metrics to monitor include revenue growth, profitability margins, debt levels, and cash flow generation to assess the company's future financial health.
Analysis
- Revenue
- Revenue growth is decelerating, as indicated by the 3-year CAGR being lower than the 5-year CAGR.
- The YoY growth rate is also lower than the 5-year CAGR, suggesting a continued slowdown.
- The most recent quarter shows a slight decrease in sales/revenue, further supporting this trend.
- Profitability
- Profitability is declining, with decreasing gross margin and EBITDA margin.
- Net income is also decreasing, reflecting the impact of rising costs and decelerating revenue growth.
- Despite the decline, Accenture's profitability ratios (ROA, ROE, ROIC) remain significantly higher than the industry average.
- Liquidity
- Accenture maintains an adequate liquidity position, as indicated by the current ratio of 1.48.
- However, the current ratio is lower than the industry average, suggesting that Accenture may have less liquidity compared to its peers.
- The quick ratio provides a similar interpretation.
- Solvency
- Accenture has a moderate level of financial leverage, as indicated by the total debt to total equity ratio of 27.56.
- This ratio is significantly lower than the industry average, indicating that Accenture uses less debt financing compared to its peers.
- Long-term debt has significantly increased, which could impact future financial flexibility.
- Operational Efficiency
- Accounts receivable are increasing, indicating potential issues with collections or increased sales on credit.
- The company needs to address the challenges in maintaining revenue growth and controlling costs to improve profitability.
- Cash Flow Analysis
- Net operating cash flow increased significantly in the most recent quarter, driven by higher net income and other funds from operations.
- Free cash flow margin is positive and significantly higher than the industry average, indicating efficient cash generation.
- Net investing cash flow remained negative due to net assets from acquisitions, reflecting the company's growth strategy.
- Risk Factors
- Increasing long-term debt could impact future financial flexibility and increase interest expenses.
- Decelerating revenue growth and declining profitability are concerns that need to be addressed.
- Increasing accounts receivable may indicate potential issues with collections or increased sales on credit.
- Future Outlook
- Expect continued growth in intangible assets due to ongoing acquisitions.
- Monitor the impact of increasing long-term debt on interest expenses and profitability.
- Key metrics to watch include the current ratio, debt-to-equity ratio, accounts receivable turnover, and free cash flow margin.
- Profitability
Financial statements
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Public filings
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- Accenture is a leading global professional services firm providing a diverse range of consulting, technology, and managed services to clients across multiple industries. The company has a strong market position, global reach, and reputation for innovation.
- However, Accenture faces headwinds from macroeconomic uncertainty, evolving client demands, intense competition, and emerging technology risks like AI. Adapting its service offerings and talent base to these changing dynamics will be critical.
- The company has been proactive in driving operational efficiency through business optimization initiatives, investing in R&D and talent development, and pursuing strategic acquisitions to enhance its capabilities. This positions Accenture well to navigate industry challenges.
- Accenture's financial performance remains solid, with revenue growth, margin expansion, and strong cash flow generation. The new debt issuance provides financial flexibility to fund growth initiatives and shareholder returns.
- Key risks include legal/regulatory issues related to government contracting and data security incidents, as well as broader operational, financial, and reputational risks inherent in the professional services industry. Careful management of these risks will be essential.
Core Business and Operations:
- Accenture is a leading global professional services company providing a broad range of services and solutions across Strategy & Consulting, Technology, Operations, Industry X, and Song
- The company serves clients in three geographic markets: the Americas, EMEA (Europe, Middle East and Africa), and Asia Pacific
- Accenture combines its strength in technology, leadership in cloud/data/AI, and industry/functional expertise to help clients build their digital core, optimize operations, accelerate growth, and enhance services
- Key offerings include consulting, managed services, technology integration, and industry-specific solutions
- Major clients span various industries including financial services, health, public sector, communications, resources, and more
- Competitors include large IT service providers, offshore firms, accounting/consulting firms, and in-house IT departments of large corporations
Industry and Market Trends:
- The professional services industry is highly competitive, with pressure on pricing and the need to continuously adapt services/solutions to evolving client demands and technological changes
- Macroeconomic conditions, geopolitical uncertainty, and inflationary pressures have impacted client spending, slowing the pace of smaller contracts and consulting work
- Clients are prioritizing large-scale digital transformations and cloud migrations, which convert to revenue over a longer period
- Emerging technologies like AI, including generative AI, are creating both opportunities and risks that Accenture must navigate
Recent Events:
- Completed 46 strategic acquisitions in fiscal 2024 to scale the business, add capabilities, and deepen industry/functional expertise
- Invested $1.2 billion in R&D and $1.1 billion in learning/development to drive innovation and build talent
- Initiated business optimization actions in fiscal 2023 to streamline operations and reduce costs, with $1.5 billion in related charges
- Issued $5 billion in senior unsecured notes to refinance commercial paper and fund general corporate purposes
Risk Factors:
- Adverse economic and geopolitical conditions impacting client demand and spending
- Inability to adapt services/solutions to evolving client needs and technological changes
- Risks and uncertainties related to the development and use of AI technologies
- Challenges in matching skills/talent with client demand and retaining key personnel
- Failure to protect client/Accenture data from security incidents or cyberattacks
- Intense competition and potential loss of market share or client relationships
- Reputational risks that could impact the ability to attract/retain business and talent
- Risks associated with managing complex global operations and strategic partnerships
- Financial risks such as pricing pressure, tax changes, currency fluctuations, and debt obligations
- Legal and regulatory risks, including government contracting challenges and IP protection issues
Legal Matters:
- Ongoing class action lawsuit related to a data security incident involving Starwood's reservations database, which Accenture provided IT infrastructure services for
- Civil and criminal investigation by the U.S. Department of Justice regarding potential inaccurate submissions by Accenture Federal Services to a government assessor
Management's Discussion and Analysis:
- Revenues grew 1% in fiscal 2024 (2% in local currency), with strong performance in Growth Markets and modest growth in North America, while EMEA was flat
- Consulting revenues declined 1% and managed services grew 4%, reflecting a shift in client demand
- Operating margin improved to 14.8% in fiscal 2024 (15.5% adjusted), driven by lower labor costs and business optimization actions
- Diluted EPS increased 6% to $11.44 ($11.95 adjusted) in fiscal 2024, benefiting from revenue growth and margin expansion
- Strong cash flow generation, with $7.8 billion returned to shareholders through dividends and share repurchases
- Maintained a robust balance sheet, with $5 billion in new senior notes issued to refinance commercial paper
Earnings calls
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Earnings Report 2025Q2 (2025-03-20)
Key takeaways
- Federal Government Uncertainty is a Key Risk: The slowdown in federal procurement and contract reviews pose a significant risk to Accenture's revenue, particularly in the second half of the fiscal year.
- Gen AI is a Growing Revenue Stream: Accenture's early investments in Gen AI are starting to pay off, with significant bookings and revenue growth, positioning them as a leader in this space.
- Large Transformational Deals are Driving Growth: The company's focus on securing large transformational deals is a key strategy for navigating market uncertainty and sustaining growth.
- Cost Management and Pricing are Critical: Maintaining stable pricing and managing costs, particularly subcontractor expenses, are essential for protecting profit margins in a competitive market.
- Diversification Provides Resilience: Accenture's diversification across geographies, industries, and types of work provides resilience in the face of economic and geopolitical uncertainty.
Focus of management’s prepared remarks
- Strong Q2 FY25 Results: Accenture delivered strong results, growing 8.5% in local currency, driven by their strategy to return to strong growth in FY25.
- New Bookings and Large Deals: Bookings reached $20.9 billion, including 32 clients with quarterly bookings greater than $100 million, reflecting prioritization of large-scale transformations by clients.
- Gen AI Growth: The company achieved a milestone quarter in Gen AI with $1.4 billion in new bookings and approximately $600 million in revenue, highlighting their leadership in this area.
- Strategic Investments: Accenture deployed over $250 million primarily across six strategic acquisitions and invested in people with approximately 15 million training hours.
- Federal Business Challenges: The new administration's focus on efficiency and a review of contracts with top consulting firms are creating uncertainty in the federal business, which represents approximately 8% of global revenue.
- Elevated Uncertainty: Recent weeks have seen an elevated level of uncertainty in the global economic and geopolitical environment, marking a shift from the first quarter.
- Client Focus on Reinvention: Clients continue to focus on reinvention, with Gen AI as a catalyst, building the digital core with more AI built-in, and focusing on areas such as the customer and core operations.
- Telstra Joint Venture: A new joint venture with Telstra to accelerate its data and AI roadmap and fast track the business into a new era of AI-driven reinvention.
- Repsol Partnership: Deepening partnership with Repsol to advance its digital program and scale Agentic AI, reinventing key business operations to drive sustainable growth.
- LearnVantage for Talent Development: LearnVantage positions Accenture to help clients develop talent and skills to drive future growth.
- Strategic Acquisitions: Investments in Industry X and supply chain capabilities with acquisitions of AOX and Staufen AG in Germany, IQT Group in Italy, Halfspace in Denmark, and Altus Consulting in the UK.
- FY25 Outlook: Revenue growth is expected to be 5% to 7% in local currency, with an inorganic contribution of a bit more than 3%. Operating margin is expected to be 15.6% to 15.7%.
Focus of the analyst Q&A
- Demand Environment Outside of U.S. Federal:
- Inquiries about whether clients are pausing new initiatives or if there's a change in the pace of converting pipeline to backlog or backlog into revenue.
- Concerns about tangible signs of any pause in client activity.
- U.S. Federal Revenue and Growth:
- Requests for clarification on the growth rate in U.S. Federal revenue in the quarter and assumptions for the second half of the year.
- Margin Outlook and Changes:
- Questions about the organic versus inorganic impact on margin changes.
- Concerns about rising costs of doing business, cost of execution, and pricing changes.
- Revenue at Risk in Federal Business:
- Attempts to frame the real revenue at risk in the federal business, considering the definition of "mission-critical" projects.
- Seeking clarity on the duration of potential impacts and the issue of replenishing work.
- Changes in Budget Conversations:
- Inquiries about how budgets were set and how conversations may have changed from January/February to March.
- Discretionary Spending:
- Questions about the level of discretionary spending and whether it has improved or deteriorated.
- Fourth Quarter Revenue Outlook:
- Concerns about the wider-than-usual revenue range for the fourth quarter and potential slowdown in organic growth.
- Health and Public Services Performance:
- Questions about the sequential decline in health and public services revenue and whether it's related to U.S. Federal or other factors.
- Pricing Environment:
- Inquiries about the stability of the pricing environment and whether it's improving.
- Geographic and Industry Slowdowns:
- Seeking details on any geographic or industry-specific slowdowns and what customers are looking for in their decision-making.
- AI and Software Partner Collaboration:
- Questions about the development of AI initiatives with software partners and any adjustments in go-to-market strategies.
- Bookings Performance:
- Inquiries about how Q2 bookings landed relative to plan and expectations for the second half.
- Workforce Management:
- Questions about the mix of subcontractors versus employees and whether a higher sub-con mix is related to transitions or specific service types.
- Economic Relationship with Customers and Gen AI:
- Concerns about changes in the economic relationship with customers as Gen AI matures and whether customers are asking for savings.
- Durable Growth Rate of Song:
- Inquiries about the durable growth rate of Song, considering efficiency gains in marketing and creativity.
- Impact of Potential Tariff Resolution:
- Seeking insights on how much customers are waiting for a resolution on tariffs and whether there's pent-up demand.
Summary
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Financial Performance
Accenture reported strong Q2 FY25 results, with revenue at $16.7 billion, growing 8.5% in local currency, at the top end of their guided range. New bookings were $20.9 billion. Diluted EPS was $2.82, a 2% increase over adjusted Q2 FY24 EPS. Operating margin was 13.5%, a 20 basis point decrease compared to adjusted Q2 FY24. The company invested over $250 million in strategic acquisitions and training. Free cash flow was $2.7 billion, and $2.4 billion was returned to shareholders through repurchases and dividends.
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Revenue Drivers
Revenue growth was broad-based across geographic markets, industry groups, and consulting and managed services. Key growth areas included banking and capital markets, industrial, health, and consumer goods, retail, and travel services in the Americas; public service, life sciences, and consumer goods, retail, and travel services in EMEA; and insurance and utilities in Asia-Pacific. Managed Services revenue grew 11% in local currency, driven by technology managed services. Gen AI bookings reached $1.4 billion, with approximately $600 million in revenue.
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Profit Margins and Cost Management
Gross margin decreased to 29.9% from 30.9% in Q2 FY24, primarily due to higher subcontractor costs and the impact of business optimization actions. Operating margin decreased by 20 basis points to 13.5%. The company is focused on pricing, contract delivery, and operational efficiency to manage margins. They expect FY25 operating margin to be 15.6% to 15.7%, a 10 to 20 basis point expansion over adjusted FY24.
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Guidance and Outlook
For Q3 FY25, Accenture expects revenue to be in the range of $16.9 billion to $17.5 billion, reflecting 3% to 7% growth in local currency. For full FY25, revenue growth is now expected to be 5% to 7% in local currency. The company anticipates an inorganic contribution of a bit more than 3%. Full-year diluted EPS is projected to be $12.55 to $12.79, a 5% to 7% growth over adjusted FY24. They expect to invest $2 billion to $3 billion in acquisitions this fiscal year. The guidance reflects an elevated level of uncertainty, including potential impacts from the federal business.
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Strategic Initiatives
Accenture is focused on large-scale transformations, reinvention through new ways of working, tech, data, and AI. They are investing in their data and AI workforce, aiming for 80,000 by the end of FY26. Key acquisitions include AOX, Staufen AG, IQT Group, Halfspace, and Altus Consulting. The company is partnering with clients like Telstra and Repsol to accelerate their use of data and AI. LearnVantage is being used to help clients develop talent and skills.
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Management Commentary
Management expressed confidence in their strategy and ability to navigate a changing market. They highlighted the importance of agility, client relationships, and leadership in Gen AI. They noted an elevated level of uncertainty in the global economic and geopolitical environment, particularly in the federal business. Management emphasized the focus on helping clients achieve both cost efficiency and growth.
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Industry and Market Conditions
The company sees strong fundamentals in the industry, with clients prioritizing reinvention and building the digital core. They noted an elevated level of uncertainty in the global economic and geopolitical environment. The new administration's goal to run the Federal government more efficiently is impacting procurement actions. The company believes the market remains competitive.
Comparative analysis
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Benchmarks (as of 2025-05-23)
Technology Select Sector SPDR Fund (XLK)
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Performance Comparison:
- Accenture Plc (ACN) has generally underperformed the Technology Select Sector SPDR Fund (XLK) over the past three years. While ACN showed a slight overperformance in the 1-year and 1-week periods, it significantly underperformed in the YTD, 3-month, 6-month, 2-year, and 3-year periods. For instance, over the last three years, ACN returned 11.5% compared to XLK's 69.98%.
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Risk and Return Analysis:
- The annualized returns for ACN are lower than those of XLK over the 2-year and 3-year periods. ACN's annualized return for 3 years is 3.7%, while XLK's is 19.34%. This indicates that XLK has provided higher returns on an annualized basis.
- In terms of annualized volatility, both ACN and XLK have experienced fluctuations. However, XLK has shown higher volatility in certain periods, such as Q3 2024 and Q1 2025.
- ACN experienced a maximum drawdown of -39.69% on 03/15/2023, while XLK had a maximum drawdown of -33.56% on 10/12/2022. This suggests that ACN has a higher risk profile in terms of potential peak-to-trough declines.
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Risk-Adjusted Performance:
- The Sharpe Ratio for XLK is generally higher than that of ACN, indicating that XLK offers better risk-adjusted returns. For example, in Q4 2023, XLK's Sharpe Ratio was significantly higher than ACN's.
- ACN's beta has decreased over time and is now below 1, indicating lower sensitivity to market movements compared to XLK, which has a beta consistently above 1. This suggests that ACN is now less volatile relative to the market.
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Overall Assessment:
- Based on the analysis, Technology Select Sector SPDR Fund (XLK) has generally outperformed Accenture Plc (ACN) in terms of historical performance, annualized returns, and risk-adjusted returns. While ACN has shown lower volatility in recent periods, its higher maximum drawdown and lower Sharpe Ratio suggest a higher risk profile. XLK's higher beta indicates greater sensitivity to market movements, but its superior returns and risk-adjusted performance make it a more attractive investment option compared to ACN.
Peers Price History(as of 2025-05-23)
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Performance Comparison:
- Accenture Plc (ACN) has shown mixed performance compared to its peer companies. Over the past year, Accenture Plc (ACN) has outperformed both Concentrix Corp. (CNXC) and Globant SA (GLOB), with returns of 5.83% compared to -8.38% and -38.93%, respectively. However, year-to-date, Accenture Plc (ACN) has underperformed Concentrix Corp. (CNXC) but outperformed Globant SA (GLOB). Specifically, Accenture Plc (ACN) has a YTD return of -10.43%, while Concentrix Corp. (CNXC) has 29.6% and Globant SA (GLOB) has -52.78%. Over longer periods (2 and 3 years), Accenture Plc (ACN) has consistently outperformed both peer companies.
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Risk and Return Analysis:
- Accenture Plc (ACN) has provided higher annualized returns compared to its peer companies over the 1, 2, and 3-year periods. For example, the 3-year annualized return for Accenture Plc (ACN) is 3.7%, while Concentrix Corp. (CNXC) is -27.08% and Globant SA (GLOB) is -18.99%.
- Accenture Plc (ACN) has generally exhibited lower annualized volatility compared to Concentrix Corp. (CNXC) and Globant SA (GLOB). Recent trends indicate that Accenture Plc (ACN) has become relatively more stable compared to its peers.
- Accenture Plc (ACN)'s maximum drawdown was -39.69% on 03/15/2023, which is significantly less than Concentrix Corp. (CNXC)'s -81.19% on 11/19/2024 and Globant SA (GLOB)'s -71.99% on 04/08/2025. This indicates a lower risk profile for Accenture Plc (ACN).
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Risk-Adjusted Performance:
- Accenture Plc (ACN) generally exhibits higher Sharpe Ratios compared to Concentrix Corp. (CNXC) and Globant SA (GLOB), indicating better risk-adjusted returns. Recent trends show that Accenture Plc (ACN) has maintained relatively stable Sharpe Ratios, while Concentrix Corp. (CNXC) has had more volatile and often negative Sharpe Ratios.
- Accenture Plc (ACN)'s beta values have generally been around 1, with a recent decreasing trend, suggesting reduced sensitivity to market movements. Globant SA (GLOB) consistently shows higher beta values, indicating greater volatility compared to the market.
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Overall Assessment:
- Accenture Plc (ACN) presents a more stable investment profile compared to Concentrix Corp. (CNXC) and Globant SA (GLOB). While Concentrix Corp. (CNXC) has shown strong YTD performance, its high volatility and significant drawdowns indicate a riskier investment. Globant SA (GLOB) also exhibits high volatility and substantial drawdowns, making it a riskier option compared to Accenture Plc (ACN). Accenture Plc (ACN)'s lower volatility, smaller drawdowns, and higher Sharpe Ratios suggest a better risk-adjusted return, making it a potentially more attractive investment for risk-averse investors.
Peers Fundamentals(as of 2025-02-28)
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Market Position and Size:
- Accenture (ACN) is the dominant player in its peer group, boasting a market capitalization of $193,805.13 million, significantly larger than Concentrix (CNXC) at $3,558.95 million and Globant (GLOB) at $4,431.87 million.
- This substantial market cap is supported by ACN's superior financial metrics, including revenue of $67,221.49 million, EBITDA of $11,862.6 million, and net income of $7,683.45 million, all of which dwarf those of its peers.
- ACN's commanding market position reflects its global reach, diverse service offerings, and established presence in the information technology services industry.
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Profitability and Efficiency:
- ACN demonstrates strong profitability, with a gross profit margin of 32.21%, exceeding both CNXC (28.97%) and GLOB (31.34%), as well as the industry average (18.17%).
- Its EBITDA margin of 17.65% and net profit margin of 11.43% also surpass those of its peers and are significantly higher than the industry averages, which are negative.
- ACN's ability to maintain high profitability margins, even with its large size, indicates efficient operations and strong pricing power.
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Financial Health and Stability:
- ACN exhibits a conservative capital structure, with a total debt to total equity ratio of 27.56%, much lower than CNXC (142.31%) and the industry average (314.46%). GLOB is at 19.61%.
- Its debt/EBITDA ratio of 0.43 is also lower than its peers and the industry average, indicating a strong ability to service its debt.
- ACN's robust cash flow generation, as evidenced by its cash flow/total debt ratio of 151.2%, further underscores its financial stability.
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Valuation and Market Perception:
- ACN's enterprise value to sales ratio of 3.3 is higher than its peers but lower than the industry average, suggesting that it is valued at a premium compared to its peers but at a discount compared to the industry.
- Its price-to-earnings ratio of 25.55 is higher than CNXC but lower than GLOB and the industry average, indicating that the market may perceive it as undervalued compared to the industry.
- Overall, ACN's valuation metrics suggest that it is valued at a premium compared to its peers, reflecting its strong financial performance and market position.
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Cash Flow and Capital Management:
- ACN generates substantial cash flow, with net operating cash flow of $10,407.32 million and free cash flow of $9,746.55 million, significantly higher than its peers.
- Its free cash flow margin of 0.14 is also higher than its peers and the industry average, indicating efficient capital management.
- ACN's strong cash flow generation capability supports its market cap and allows it to invest in future growth opportunities.
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Growth and Future Prospect:
- ACN's growth in sales/revenue, EBITDA, and net income has been lower than its peer group average in recent years.
- However, it has shown superior growth in free cash flow and free cash flow margin compared to its peers.
- While its growth rates have fluctuated, ACN's strong market position and financial stability position it well for future success.
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Potential for Investment:
- ACN presents an attractive investment opportunity due to its size, profitability, efficiency, and financial stability.
- While its growth potential may be lower compared to some peers, its strong cash flow generation and conservative capital structure make it a relatively safe investment.
- Its valuation metrics suggest that it may be undervalued compared to the industry, offering potential upside for investors.
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Key Risks and Considerations:
- ACN's slower growth in sales/revenue, EBITDA, and net income compared to its peers is a potential risk factor.
- Its lower current ratio and quick ratio compared to its peers and the industry average suggest potentially lower liquidity.
- Changes in technology, competition, and economic conditions could also impact ACN's future performance.
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Overall Assessment:
- Accenture (ACN) is a financially strong and well-positioned company with a dominant market position in the information technology services industry.
- While its growth in certain areas has been slower than its peers, its high profitability, efficient operations, and robust cash flow generation make it an attractive investment opportunity.
- Investors should carefully consider the potential risks and challenges facing ACN, but overall, the company appears to be in a solid financial position with a positive outlook.
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