Accenture (ACN) reported fourth-quarter revenue and profit that both exceeded expectations. Strong order volume and expanded profit margins drove the stock to its largest single-day gain in history and lifted global software and IT services stocks. The company’s guidance for fiscal 2027 indicates that fears about artificial intelligence disrupting demand for services have not materialized, and conditions have not continued to deteriorate as the market feared. However, after the sharp stock price increase, valuations have risen markedly, and the market’s attitude toward its subsequent investment value has become more cautious.
Accenture’s stock surged sharply on Thursday, rising as much as 22.2% as of 10 a.m. Eastern Time. This followed the company’s release of an annual revenue growth forecast higher than market expectations. Accenture’s stock rally also drove other software and IT services stocks higher. By the close of U.S. trading, Accenture’s stock gain still stood at 15.91%, and its total market capitalization climbed to $141.9 billion.
The latest disclosed financial report shows that in the fourth quarter of fiscal 2026, ended August 31, Accenture’s revenue was $18.7 billion, far above analysts’ expectation of $18.04 billion, up 6.3% year over year; net profit was $1.99 billion, up 40.83% year over year; earnings per share were $3.29, compared with $2.25 in the same period last year. Strong order volume boosted results. In the fourth quarter, the company’s new bookings reached $22.2 billion, up 4.2% year over year, exceeding the market consensus estimate of $20.04 billion. Consulting bookings rose 6% year over year to $9.4 billion, while managed services bookings rose 2.7% year over year to $12.77 billion. Driven by improved operating efficiency, Accenture’s operating margin expanded from 11.6% in the same period last year to 15.3%, while gross margin rose slightly from 31.9% to 32%. Accenture generated $2.8 billion in free cash flow in the quarter, with full-year free cash flow of $11.6 billion.
After a relatively sluggish performance in the previous quarter, this strong set of results delivered a welcome surprise to Wall Street. TD Cowen analyst Bryan Bergin emphasized in a note to clients that Accenture’s solid finish marked a significant reversal from a difficult third fiscal quarter, and pointed out that against the backdrop of a sluggish macroeconomic environment, this rebound could trigger a strong market reaction.
In terms of business guidance, Accenture told investors that it expects sales growth of 3% to 6% in fiscal 2027 on a “local currency” basis. Earnings growth is expected to continue outpacing sales growth, indicating that profit margins are also improving. Management forecasts profit growth of 6% to 9%, falling within a range of $14.39 to $14.81 per share. Based on the midpoint of that range, $14.60, and Accenture’s stock price today of $226 per share, the price-to-earnings ratio is about 15.5 times. After subtracting the generous 3.6% dividend yield, the market may want to see the stock’s price-to-earnings ratio approach 12 times before considering it worth buying. Now that the stock has risen so much after the earnings release, the market’s attitude toward investing in Accenture stock has become more cautious.
