Will Accenture (ACN) Disappoint this Earnings Season? - Analyst Blog

Accenture plc ACN is slated to release third-quarter fiscal 2014 results on Jun 26. In the last quarter, the company delivered a negative earnings surprise of 0.96%. Let's see how things are shaping up for this announcement.

Factors to Consider

Accenture delivered dismal second-quarter results, wherein both the top and bottom lines missed the respective Zacks Consensus Estimate. Although revenues increased on a year-over-year basis reflecting an increased focus on the Outsourcing business, the consulting business remained a drag.

Nonetheless, Accenture's deal wins across different industries, especially insurance, during the quarter reflects strong demand for its services, boosting the company's prospects. Moreover, increasing focus on the Outsourcing business, operating cost optimization, new bookings and continued return to shareholders are expected to remain the quarter's positives. Strategic acquisitions are also expected to boost Accenture's growth prospects.

However, increasing pricing pressure from Cognizant Technology Solutions and International Business Machines IBM could affect Accenture's margins. A strained spending environment and Accenture's broad European exposure may also temper its growth prospects to some extent.

Earnings Whispers?

Our proven model does not conclusively show that Accenture is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.21. Thus, the ESP is 0.00%.

Zacks Rank: Accenture currently has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks that Warrant a Look

Here are a couple of companies that you may want to consider as our model shows they have the right combination of elements:

Monsanto Company MON has an Earnings ESP of +3.23% and a Zacks Rank #3 (Hold).

Lindsay Corporation LNN has an Earnings ESP of +0.72% and a Zacks Rank #3 (Hold).

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