ACN: Did Accenture’s Guidance Increase Fall Short of Analyst Estimates?

By Douglas A. McIntyre Published Mar 28, 3:03AM EDT

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By William Trent, CFA of Stock Market Beat

Accenture Reports Strong Second-Quarter Fiscal 2007 Financial Results: Financial News – Yahoo! Finance

Accenture (ACN) reported strong financial results for the second quarter of fiscal 2007, ended Feb. 28, with net revenues of $4.75 billion, a year-over-year increase of 16 percent in U.S. dollars and 10 percent in local currency. Consulting and outsourcing revenues both grew by double digits in U.S. dollars.GAAP diluted earnings per share were $0.47, compared with $0.11 in the same period last year. EPS of $0.47 increased 27 percent over adjusted EPS of $0.37 in the second quarter last year, reflecting the items described below under Financial Review.

The adjustment from last year relates to a provision taken due to the loss of a major contract. Analysts were expecting the company to earn $0.42 on $4.7 billion in revenues. The outlook was also fairly strong:

Third Quarter Fiscal 2007

Accenture expects net revenues for the third quarter of fiscal 2007 to be in the range of $4.9 billion to $5.1 billion.

Fiscal Year 2007

For the full fiscal year 2007, Accenture now expects net revenue growth to be at the high end of its previously communicated range of 9 percent to 12 percent in local currency. The company has revised its outlook for diluted EPS upward to the range of $1.88 to $1.93, which is $0.08 higher than its previously communicated range of $1.80 to $1.85.

The company continues to expect operating cash flow to be $1.95 billion to $2.15 billion; property and equipment additions to be $335 million; and free cash flow to be in the range of $1.6 billion to $1.8 billion. The company now expects its annual effective tax rate to be in the range of 34 percent to 36 percent. Accenture continues to target new bookings for fiscal 2007 in the range of $22 billion to $24 billion.

Although the company raised its estimates for the year, analyst estimates were already above the previous guidance range, at $1.87. Since Accenture beat by a nickel in the current quarter, the $1.88-$1.93 guidance actually would appear to indicate that earnings per share in the second half will be lower than analysts were forecasting.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.