Why Accenture Stock Soared on Thursday

Source Motley_fool

Key Points

  • Accenture beat on sales and beat on earnings this morning.

  • Profit margins rose strongly, transforming a modest 6% revenue gain into 46% better profits in Q4.

  • 10 stocks we like better than Accenture Plc ›

Accenture (NYSE: ACN) stock soared an astounding 22.2% through 10 a.m. ET Thursday after beating earnings in its Q4 and full-year report this morning.

Heading into earnings, analysts expected Accenture to report a $3.19 per share profit on just over $18 billion in quarterly sales. In fact, the consulting giant earned $3.29 per share on $18.7 billion in sales.

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Accenture Q4 earnings

Revenue grew 6% year over year at Accenture, both for the quarter and the year. Total revenue for fiscal 2026 came to $74.2 billion.

Profit margins expanded, too. Accenture reported a 15.3% gross margin for the fourth quarter, up 370 basis points, and a 15.4% margin for the year, up 70 basis points versus fiscal 2025.

Between sales growth and expanding margins, Accenture's Q4 profit grew 46%. Full-year profit was up 12% to $13.56 per share.

Accenture generated free cash flow of $2.8 billion in the quarter and $11.6 billion for the whole year.

What's next for Accenture

Turning to guidance, Accenture told investors to expect 3% to 6% sales growth in "local currency" in fiscal 2027. (Revenue calculated in U.S. Dollar terms could be slightly different.)

Earnings growth is expected to continue outpacing sales growth, suggesting that margins are also improving. Management forecasts profits to grow 6% to 9%, landing somewhere between $14.39 and $14.81 per share.

Working off the $14.60 midpoint of that range, Accenture stock at $226 per share today sells for about 15.5 times earnings. Subtracting out the generous 3.6% dividend yield, I'd probably want to see the stock sell for closer to 12 times earnings before calling this one a buy.

Now that the stock has gone up so much post-earnings, I won't be investing in Accenture stock.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends the following options: long January 2028 $260 calls on Accenture Plc and short January 2028 $280 calls on Accenture Plc. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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