Accenture PLC Valuation – February 2016 $ACN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Accenture PLC (ACN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Accenture plc is engaged in providing management consulting, technology and outsourcing services. The Company’s business is structured around five operating groups, which together consists of 19 industry groups serving clients in industries globally. The Company’s segment includes Communications, Media & Technology, Financial Services, Health & Public Service, Products and Resources. The Communications, Media & Technology segment serves the communications, electronics, technology, media and entertainment industries. The Financial Services segment serves the banking, capital markets and insurance industries. The Health & Public Service segment serves healthcare payers and providers, government departments, public service organizations, educational institutions and non-profit organizations. The Products segment serves consumer-relevant industries. The Resources segment serves the chemicals, energy, forest products, metals and mining, utilities and related industries.


To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of ACN

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $67,173,050,010 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.25 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 104.39% Pass
6. Moderate PEmg Ratio PEmg < 20 21.39 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.69 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.25 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.01 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ACN value chart February 2016

EPSmg $4.80
MG Growth Estimate 7.39%
MG Value $111.82
Opinion Fairly Valued
MG Value based on 3% Growth $69.65
MG Value based on 0% Growth $40.83
Market Implied Growth Rate 6.44%
Current Price $102.73
% of Intrinsic Value 91.87%

Accenture PLC qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the low current ratio.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.22 in 2012 to an estimated $4.80 for 2016.  This level of demonstrated earnings growth supports the market’s implied estimate of 6.44% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Stage 3: Information for Further Research

ACN charts February 2016

Net Current Asset Value (NCAV) -$2.19
Graham Number $32.47
PEmg 21.39
Current Ratio 1.25
PB Ratio 11.69
Dividend Yield 2.06%
Number of Consecutive Years of Dividend Growth 5



Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Nov2015
Total Current Assets $10,623,048,000
Total Current Liabilities $8,472,398,000
Long-Term Debt $25,807,000
Total Assets $17,993,875,000
Intangible Assets $4,044,550,000
Total Liabilities $12,093,450,000
Shares Outstanding (Diluted Average) 671,301,000

Earnings Per Share History

Next Fiscal Year Estimate $5.15
Aug2015 $4.76
Aug2014 $4.52
Aug2013 $4.93
Aug2012 $3.84
Aug2011 $3.39
Aug2010 $2.66
Aug2009 $2.44
Aug2008 $2.65
Aug2007 $1.97
Aug2006 $1.59
Aug2005 $1.56
Aug2004 $1.22
Aug2003 $1.05
Aug2002 $0.56

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.80
Aug2015 $4.52
Aug2014 $4.22
Aug2013 $3.86
Aug2012 $3.22
Aug2011 $2.81
Aug2010 $2.44
Aug2009 $2.23
Aug2008 $2.02
Aug2007 $1.63
Aug2006 $1.37
Aug2005 $1.13
Aug2004 $0.80
Aug2003 $0.50
Aug2002 $0.19

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Business Support Industry – November 2015
The 10 Best Stocks For Value Investors This Week – 6/20/15
Accenture plc Analysis – June 2015 Update $ACN
18 Companies in the Spotlight This Week – 3/15/15
Accenture PLC Quarterly Valuation – March 2015 $ACN

Other ModernGraham posts about related companies

Cintas Corp Valuation – December 2015 Update $CTAS
The Best Companies of the Business Support Industry – November 2015
Paychex Inc. Valuation – November 2015 Update $PAYX
Robert Half International Inc. Valuation – November 2015 Update $RHI
Alliance Data Systems Corporation Analysis – October 2015 Update $ADS
Automatic Data Processing Analysis – September 2015 Update $ADP
Accenture PLC Analysis – September 2015 Update $ACN
Dun & Bradstreet Corp. Analysis – September 2015 Update $DNB
Cintas Corporation Analysis – August 2015 Update $CTAS
Apollo Education Group Inc. Analysis – Initial Coverage $APOL


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.