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Accenture reported second-quarter results before Thursday's opening bell. The provider of technical and professional services to other businesses delivered strong results, and Accenture shares rose more than 6% on Thursday to set fresh all-time highs.
Accenture's results: The raw numbers
Source: Business Wire.
What happened with Accenture this quarter? This was a solid performance across the board. Four of Accenture's five operating divisions saw double-digit revenue growth in local currencies, and the company booked $9.5 billion of fresh contracts in the quarter.
- Accenture sailed past the top end of its own revenue guidance for the second quarter, thanks to strong sales of consulting services worldwide.
- The GAAP earnings above were inflated by the sale of travel and tourism information service Navitaire to travel specialist Amadeus. That $830 million deal added $0.74 per share to Accenture's bottom line. Even without that one-time boost, Accenture's adjusted earnings of $1.34 per share represented a 24% lift from the year-ago period, and left analysts flat-footed.
- Earnings were helped by solid operating results, but lifted even further by share buybacks and a lower effective tax rate. The tax benefit came from the completion of audits on Accenture's 2014 taxes, along with a less taxing geographical business mix.
Looking ahead, Accenture's management sees currency headwinds fading while the company takes advantage of the second quarter's gains.
- Third-quarter sales are seen rising about 9% in local currencies, landing near $8.3 billion. The company did not offer any bottom-line or cash flow targets for this period.
- Encouraged by this quarter's big sales, Accenture also raised its full-year revenue growth forecast from 7.5% to 9%, all in local currencies. Adjusted earnings are now expected at $6.00 per diluted share. That's up from a previous forecast of $5.17 per share.
What management had to say As always, this overnight surprise was actually a long time in the making. CEO Pierre Nanterme explained how Accenture is starting to reap the rewards of careful planning.
"We are benefiting from the focused investments we are making to rotate our business to new, high-growth areas," Nanterme said. "Our capabilities are clearly resonating with the needs of our clients and differentiating us in the marketplace. At the same time, we continue to manage Accenture with discipline to further enhance our competitiveness."
Looking ahead The refreshed guidance ranges include the impact of somewhat higher expected tax expenses. Still, the rapidly rising revenues should more than make up for that bottom-line concern.
The company is leaning into its highly profitable consulting business at a time when several IT giants are tweaking their business models in that direction. That could be a problem, with rising competition for Accenture's client contracts. But with results like these, it looks like the company formerly known as Andersen Consulting is holding its own in an expanding market.
Accenture shares have now gained 28% over the last 52 weeks, easily outpacing the S&P 500's roughly breakeven chart.
The article Accenture Plc Raises 2016 Guidance on Solid Q2 Results originally appeared on Fool.com.
Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Accenture. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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