Acccenture Earnings On Deck, Stock (ACN) Continues To Underperform

Accenture plc (NYSE: ACN),thea global professional services giant, prepares to release its third-quarter fiscal year 2025 earnings before the opening bell on Friday, June 20th. With U.S markets closed today for the Juneteenth holiday, Accenture's stock heads into the print trading at $306.38, down 12.17% since the start of the year, and significantly underperforming the broader market.

Analysts are expecting to see positive momentum on the earnings front, with EPS estimates of $3.32 for the current quarter. The projected EPS for the full fiscal year ending August 31, 2025, is $12.72.

Revenue is expected to come in at $17.32 billion, reflecting a 5.2% increase from the $16.47 billion in the same period year-over-year.

Looking to previous reports for clues, and Accenture's most recent results (FY2025, Q2), while exceeding analyst expectations, failed to provide the boost the stock needed. The company reported an EPS of $2.82, slightly above the consensus estimate of $2.81, representing a modest 2% increase year-over-year. Revenue also surpassed expectations, reaching $16.7 billion, an 8.5% growth in local currency compared to the same quarter last year. The operating margin improved to 13.5%, up from 13% the previous year, indicating improved efficiency, whilst new bookings were strong at $20.9 billion, with $1.4 billion attributed to generative AI services, a promising sign of Accenture's focus on emerging technologies.

However, the market's reaction to the earnings release was lukewarm, with the stock initially falling due to investor apprehension about the company's future guidance. Accenture subsequently narrowed its full-year EPS guidance to a range of $12.55 to $12.79, compared to the previous range of $12.43 to $12.79.

While the company raised its revenue growth forecast to 5% to 7% in local currency, up from the prior outlook of 4% to 7%, this wasn't enough to quell investor concerns. This highlights a crucial point: in today's market, exceeding expectations isn't always enough; investors are laser-focused on future prospects and any hint of uncertainty can trigger a sell-off.

The current stock price sits below both the 50-day ($318.45) and 200-day ($343.49) simple moving averages, highlighting the bearish trend in the short to medium term. With a market capitalization of approximately $192.27 billion, Accenture remains a substantial player, but its trailing P/E ratio of 25.78 and a PEG ratio of 3.23 suggest that investors are paying a premium for its earnings growth, raising concerns about whether that growth can be sustained.

Looking to the street, the average price target of $353.80 indicates more than 10% in perceived upside from current levels, suggesting that analysts believe the stock has room to grow. JP Morgan analyst Tien-tsin Huang indicated the same, with an increased price target on Monday to $353 (from $349), along with an Overweight rating. The firm expects revenue to come in in-line, whilst currency swings are expected to provide some earnings upside .

Outlook will likely prove key to sentiment in the short term, with JP Morgan expecting this to come in unchanged. It may take something more in the current climate in order to change the momentum of the stock, although there have been some notable surprises.