Benzinga - by Zacks, Benzinga Contributor.
Did you analyze how Accenture (NYSE: ACN) fared in its international operations for the quarter ending May 2024? Given the widespread global presence of this consulting company, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.
In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.
Presence in international markets can act as a hedge against domestic economic downturns and provide access to faster-growing economies. However, this diversification also brings complexities due to currency fluctuations, geopolitical risks and differing market dynamics.
While delving into ACN's performance for the past quarter, we observed some fascinating trends in the revenue from its foreign segments that are commonly modeled and observed by analysts on Wall Street.
The recent quarter saw the company's total revenue reaching $16.47 billion, marking a decline of 0.6% from the prior-year quarter. Next, we'll examine the breakdown of ACN's revenue from abroad to comprehend the significance of its international presence.
Unveiling Trends in ACN's International Revenues
Growth Markets accounted for 17.3% of the company's total revenue during the quarter, translating to $2.86 billion. Revenues from this region represented a surprise of -8.28%, with Wall Street analysts collectively expecting $3.11 billion. When compared to the preceding quarter and the same quarter in the previous year, Growth Markets contributed $2.82 billion (17.9%) and $3.23 billion (19.5%) to the total revenue, respectively.
During the quarter, Europe contributed $5.78 billion in revenue, making up 35.1% of the total revenue. When compared to the consensus estimate of $5.87 billion, this meant a surprise of -1.62%. Looking back, Europe contributed $5.6 billion, or 35.4%, in the previous quarter, and $5.62 billion, or 33.9%, in the same quarter of the previous year.
Prospective Revenues in International Markets
Wall Street analysts expect Accenture to report $16.26 billion in total revenue for the current fiscal quarter, indicating an increase of 1.7% from the year-ago quarter. Growth Markets and Europe are expected to contribute 18.6% ($3.03 billion) and 35.9% ($5.84 billion) to the total revenue, respectively.
Analysts expect the company to report a total annual revenue of $65.12 billion for the full year, marking an increase of 1.6% compared to last year. The expected revenue contributions from Growth Markets and Europe are projected to be 17.8% ($11.6 billion) and 35.5% ($23.11 billion) of the total revenue, in that order.
Concluding Remarks
Accenture's leaning on foreign markets for its revenue stream presents a mix of chances and challenges. Therefore, a vigilant watch on its international revenue movements can greatly aid in projecting the company's future direction.
In an era of growing international ties and escalating geopolitical disputes, financial analysts on Wall Street pay keen attention to these developments to fine-tune their earnings estimations for businesses operating across borders. It's important to note, however, that a range of additional variables, like a company's local market status, also play a crucial role in shaping these forecasts.
We at Zacks strongly focus on the dynamic earnings forecast of companies, given that empirical studies have demonstrated its potent impact on the immediate price movement of stocks. Invariably, there's a positive relationship -- upward earnings predictions often result in an increase in stock prices.
Our proprietary stock rating tool, the Zacks Rank, with its externally validated exceptional track record, harnesses the power of earnings estimate revisions to serve as a dependable measure for anticipating the short-term price trends of stocks.
Accenture currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.
Reviewing Accenture's Recent Stock Price Trends
The stock has increased by 2.7% over the past month compared to the 2.7% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Business Services sector, which includes Accenture, has increased 0.6% during this time frame. Over the past three months, the company's shares have experienced a loss of 10.9% relative to the S&P 500's 4.9% increase. Throughout this period, the sector overall has witnessed a 4% decrease.
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