Accenture Shares Plummet Despite Better-Than-Expected Earnings
Ireland-based Accenture’s shares took a significant hit on Friday, dropping 6.9% to settle at $285.4 apiece, despite the company reporting better-than-expected financial results for the March-May quarter. The shares had fallen as much as 10.8% in intraday trade.
Earnings Highlights
- Revenue: Accenture’s quarterly revenue increased 8% in dollar terms and 7% in local currency, exceeding analysts’ estimates, with a quarterly revenue of $17.7 billion.
- Earnings Per Share (EPS): The company logged an EPS of $3.49, beating estimates.
- Guidance: Accenture revised its guidance for revenue and EPS for the full financial year, expecting annual revenue growth to be in the range of 6-7%, up from its earlier projection of 5-7%. Full-year EPS is now forecast in the range of $12.77-12.89.
Why Accenture Results Matter
Accenture’s results are closely tracked by Indian IT companies and investors to gauge global technology demand trends. The company’s business model is similar to that of Tier 1 Indian IT firms like TCS and Infosys, and it caters to similar international markets. Accenture’s unique financial year means its earnings are released about a month before Indian IT firms’ results.
Market Reaction
Despite beating estimates, Accenture’s shares fell sharply, with some analysts possibly looking beyond the numbers. The company’s revised guidance may not have been enough to impress investors. Indian IT stocks, including TCS, HCL Tech, and Infosys, also fell up to 3% following Accenture’s results.
