Accenture Jumps 7% on Upbeat Forecast Despite Earnings Miss: Does AI Growth Make ACN a BUY?

Accenture (ACN) delivered fiscal Q3 results Thursday morning right before the market opened, and despite a miss on the top and bottom lines, the company’s forecast for the road ahead was enough to send shares nearly 7% higher.

Revenue for the third quarter was disappointing at just $16.47 billion, narrowly below the $16.53 billion estimate. Adjusted profit per share came in at just $3.13, also shy of the consensus at $3.15.

But, fortunately for the IT services provider, the spotlight was placed on the company’s AI growth prospects and what this could mean in the long run. 

CEO Julie Sweet said that GenAI has become a catalyst for companies across industries to seek lower costs, creating substantial opportunities for Accenture. 

The company helps other businesses migrate operations to the cloud, which is becoming more and more essential amidst budget cuts for large enterprises.

There were silver linings from the third quarter, too. New bookings is a key metric assessing the value of customer contracts with a spending commitment, and this figure was up quite a bit year over year to $21.06 billion from just $17.25 billion. $900 million of that is associated with GenAI.

While many analysts saw a downside for ACN coming into earnings day and lowered their price targets, Jeffries analyst Surinder Thind says he sees demand for big transformation projects remaining intact for the company.

Accenture’s own forecast echoes that sentiment, with an annual revenue growth projection in the range of 1.5-2.5%. Analysts are expecting just 1.6%. 

While ACN had fallen 19% this year as a result of economic turmoil and higher interest rates forcing companies to hold off on new investments, we can see the tide turning. 

But, is today’s news enough to earn this stock a BUY? We’ve taken a look through the VectorVest stock software and found 3 things you need to see before you make your next move.

ACN Has Fair Upside Potential and Timing With Good Safety

VectorVest empowers you to win more trades with less work and stress by delivering clear, actionable insights in just 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). 

Each sits on a scale of 0.00-2.00, with 1.00 being the average - making interpretation quick and easy. Just pick safe, undervalued stocks rising in price! 

It gets even better, though. VectorVest offers a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we uncovered for ACN:

• Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year projection), AAA corporate bond rates, and risk. This offers far superior insights than the typical comparison of price to value alone. ACN has a fair RV rating just above the average at 1.04.
• Good Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. ACN has a good RS rating of 1.23.
• Fair Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. ACN has a fair RT rating of 0.93, slightly below the average.

The overall VST rating of 1.07 is considered fair, but not quite enough to earn the stock a buy. It’s currently rated a HOLD in the VectorVest system. 

That being said, we encourage you to take a closer look at this opportunity yourself with a free stock analysis today. Discover a simple, stress-free approach to investing with VectorVest!

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Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. ACN got a 7% boost Thursday morning after releasing its third-quarter results, which came in slightly below analyst expectations on both the top and bottom lines. However, AI-growth prospects fueled an upbeat forecast for the road ahead. The stock itself has fair upside potential and timing with good safety.

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