Buyouts & Partnerships To Drive Accenture (ACN) Q1 Earnings

Accenture Plc (NYSE:ACN) is set to report first-quarter fiscal 2018 results on Dec 21. The Zacks Consensus Estimate for the quarter is pegged at $1.67, representing year-over-year growth of 5.4%. Additionally, analysts polled by Zacks project revenues of roughly $9.24 billion, up 8.6% from the year-ago quarter.

Accenture’s fiscal first-quarter result is likely to benefit from acquisitions and strategic partnerships.

Let’s now discuss the aforementioned factors in detail.

Acquisitions Expand Offerings & Global Reach

Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. The company closed 37 acquisition deals worth approximately $1.7 billion in fiscal 2017. Also, over the last three fiscals, Accenture has invested approximately $3.4 billion in acquiring nearly 70 companies, including start-ups.

These acquisitions have helped the company enhance its product offerings and penetrate into newer markets, thereby contributing to the company’s top line. We believe the company’s acquisition strategy will have a positive impact on Accenture’s fiscal first-quarter top-line performance.

Partnerships Bringing in Additional Revenues

Apart from acquisitions, Accenture’s strategic partnerships with companies like Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) , Oracle (NYSE:ORCL) and Salesforce (NYSE:CRM) have also been key catalysts. These have helped the company strengthen its product portfolio.

In August 2017, the company entered into a partnership with Apple (NASDAQ:AAPL) where the firms joined forces to create a mixed team of designers, programmers, and other Apple experts, within Accenture Digital Studios units in select locations around the world. The team will focus on developing tools and services for building iOS apps as per the requirements of Accenture’s clients across different industries. We believe this partnership will help Accenture enhance its digital transformation capabilities and bring in additional revenues.

Partnerships have always helped the company fortify its presence across segments like IT security, customer-relationship management and consulting, thereby bolstering its revenues. We expect the company to retain this bullish momentum, backed by its continued focus on operational efficiency.

What the Zacks Model Unveils?

Our proven model shows that Accenture is likely to beat earnings estimates this quarter. This is because the stock fulfils the Zacks criteria for this to happen, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Accenture currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.49%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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