Accenture dropped 12% after Q3 revenue missed estimates and a Q4 outlook that came in below consensus. Consulting demand is slow, but outsourcing held up. The stock trades at 22x forward earnings.
Shares of Accenture (ACN) fell about 12% in premarket trading Thursday after the consulting firm's fiscal third-quarter revenue and its current-quarter outlook both came in below analyst estimates.
The company posted Q3 revenue of $16.5 billion, short of the $16.6 billion consensus compiled by Bloomberg. Adjusted earnings per share of $2.82 edged past the $2.81 estimate by a penny. New bookings totaled $18.7 billion, down from $21.3 billion in the same quarter last year.
For the fiscal fourth quarter, Accenture forecast revenue in a range of $16.05 billion to $16.65 billion. The midpoint of $16.35 billion trails the $16.7 billion analysts were looking for. The company also tightened its full-year revenue growth outlook to 5% to 6%, from the prior band of 4% to 7%.
Management cited a slower-than-expected recovery in consulting demand, particularly in financial services and technology verticals, the company said in its earnings release. Outsourcing revenue held up better, rising 6% year over year to $8.7 billion. Consulting revenue slipped 1% to $7.8 billion.
Accenture's board authorized a new $4.18 billion share buyback program. The company said the move reflects confidence in its long-term cash generation. The premarket selloff erased roughly $25 billion in market value.
The consulting segment has faced pressure across the sector as clients defer discretionary projects. Accenture's results follow similar cautious commentary from peers including Cognizant and Infosys, both of which flagged extended sales cycles in their most recent quarterly reports.
Accenture carries an Alpha Score of 47 out of 100, a Mixed rating that reflects the tension between its strong balance sheet and the uncertain demand outlook. The stock now trades at roughly 22 times forward earnings, down from 28 times in early 2024.
The narrowed full-year guidance range leaves the upper bound unchanged from the prior outlook but raises the floor, suggesting management sees less downside risk than three months ago even as consulting growth remains sluggish. For more on Accenture's fundamentals and positioning, see the ACN stock page.
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