Accenture plc reports 21.4 pp ROIC decline from 62.1% to 40.7% in 2020 in 2020 while 15.1% EBITDA growth
09/24/2020 • About Accenture plc (
$ACN) • By InTwits
Accenture plc reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 18.7% in FY2020 vs. 16.7% in FY2019 vs. 15.9% in FY2016
- Accenture plc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%.
- CAPEX is quite volatile: $1m in FY2020, $1m in FY2019, $0m in FY2018, $0m in FY2017, $1m in FY2016
- The company has highly profitable business model: ROIC is 40.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.6%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.9 pp from 16.6% to 10.7% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2017 at 14.8% and was growing since that time.
Gross Margin increased slightly on 0.72 pp from 30.8% to 31.5% in FY2020. Gross Margin followed a growing trend at 0.48 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased on 2.5 pp from 14.4% to 16.8% in FY2020.
Net Income margin showed almost no change in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at 9.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Accenture plc's CAPEX/Revenue was 1.4% in FY2020. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 1.4%.
Return on investment
The company operates at high and attractive ROIC (40.7%) and ROE (32.5%). ROIC dropped on 21.4 pp from 62.1% to 40.7% in FY2020. ROE decreased on 6.1 pp from 38.6% to 32.5% in FY2020. ROIC followed a declining trend at -8.1 pp per annum in FY2016-FY2020. ROE followed a declining trend at -5.8 pp per annum in FY2016-FY2020.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and 0.4x Debt / EBITDA. Debt surged on 15,283% while cash jumped on 37.4%.
Accenture plc has no short term refinancing risk: cash is higher than short term debt (1,101.7%).
Valuation and dividends
The company's trades at EV/EBITDA 15.9x and P/E 26.7x.
Management team
Accenture plc's CEO Julie Spellman Sweet has spent 1 year with the company. Accenture plc's CFO is Kc Mcclure. Kc Mcclure has 2 years tenure at the company.
Financial and operational results
Accenture plc ($ACN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 34,798 | 36,765 | 41,603 | 43,215 | 44,327 | 2.6% |
| Gross Profit | 10,277 | 11,030 | 12,443 | 13,315 | 13,976 | 5.0% |
| SG&A | 4,824 | 5,184 | 5,811 | 6,210 | 7,463 | 20.2% |
| EBITDA | 5,539 | 5,434 | 6,768 | 7,198 | 8,287 | 15.1% |
| EBIT | 4,810 | 4,633 | 5,841 | | | |
| Tax | 1,254 | 981 | 1,593 | | | |
| Net Income | 4,112 | 3,445 | 4,060 | 4,779 | 5,108 | 6.9% |
| Stock Based Compensation | 758 | 795 | 977 | | | |
Balance Sheet
|
|---|
| Cash | 4,906 | 4,127 | 5,061 | 6,127 | 8,415 | 37.4% |
| Accounts Receivable | 4,072 | 4,569 | 4,996 | | | |
| Accounts Payable | 1,281 | 1,525 | 1,349 | | | |
| Short Term Debt | 3 | 3 | 5 | 6 | 764 | 11,815.1% |
| Long Term Debt | 24 | 22 | 20 | 16 | 2,722 | 16,651.6% |
Cash flow
|
|---|
| Capex | 497 | 516 | 619 | 599 | 599 | 0.0% |
| Dividends | 1,438 | 1,568 | 1,709 | | | |
| Acquisitions | 933 | 1,704 | 637 | | | |
Ratios
|
|---|
| Revenue growth | 5.7% | 5.7% | 13.2% | 3.9% | 2.6% | |
| EBITDA growth | 9.0% | -1.9% | 24.5% | 6.4% | 15.1% | |
|
|---|
| Gross Margin | 29.5% | 30.0% | 29.9% | 30.8% | 31.5% | 0.7% |
| EBITDA Margin | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% | 2.0% |
| EBIT Margin | 13.8% | 12.6% | 14.0% | | |
| SG&A, % of revenue | 13.9% | 14.1% | 14.0% | 14.4% | 16.8% | 2.5% |
| SBC, % of revenue | 2.2% | 2.2% | 2.3% | | |
| Net Income Margin | 11.8% | 9.4% | 9.8% | 11.1% | 11.5% | 0.5% |
| CAPEX, % of revenue | 1.4% | 1.4% | 1.5% | 1.4% | 1.4% | -0.0% |
|
|---|
| ROIC | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% | -21.4% |
| ROE | 60.1% | 41.7% | 42.0% | 38.6% | 32.5% | -6.1% |
| Net Debt/EBITDA | -0.9x | -0.8x | -0.7x | -0.8x | -0.6x | 0.3x |
People
|
|---|
| Insider ownership | 0.2% | 0.2% | 0.2% | | | |
| Employees | 384,000 | 459,000 | 459,000 | | | |
| Revenue/Employee, th. $ | 91 | 80 | 91 | | | |
Accenture plc ($ACN) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 11,359 | 11,142 | 10,991 | 10,835 | | - | - | - | - |
| EBITDA | 2,341 | 2,110 | 2,342 | 2,032 | | - | - | - | - |
| Net Income | 1,357 | 1,235 | 1,228 | 1,288 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 5,811 | 5,436 | 6,442 | 8,415 | | - | - | - | - |
| Short Term Debt | 714 | 744 | 747 | 764 | | - | - | - | - |
| Long Term Debt | 2,668 | 2,666 | 2,765 | 2,722 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 32.1% | 30.2% | 32.1% | 31.8% | | - | - | - | - |
| EBITDA Margin | 20.6% | 18.9% | 21.3% | 18.7% | | - | - | - | - |
| Net Income Margin | 11.9% | 11.1% | 11.2% | 11.9% | | - | - | - | - |
Peers in IT Consulting & Other Services
Below you can find Accenture plc benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| Research Solutions Inc/CA ($RSSS) | - | -25.1% | 8.8% | 2.8% | 7.9% |
| |
|---|
| Median (13 companies) | 8.3% | 3.9% | 3.6% | 7.6% | -0.8% |
|---|
| Accenture plc ($ACN) | - | 5.7% | 13.2% | 3.9% | 2.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| |
|---|
| Median (13 companies) | 28.8% | 29.1% | 29.9% | 35.9% | 33.9% |
|---|
| Accenture plc ($ACN) | 29.5% | 30.0% | 29.9% | 30.8% | 31.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 19.8% | 19.7% | 20.5% | 19.2% | 17.8% |
| |
|---|
| Median (13 companies) | 6.7% | 6.9% | 7.2% | 13.9% | 11.9% |
|---|
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| |
|---|
| Median (13 companies) | 1.1% | 1.4% | 1.5% | 2.4% | 2.4% |
|---|
| Accenture plc ($ACN) | 1.4% | 1.4% | 1.5% | 1.4% | 1.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| Endava plc ($DAVA) | - | 36.0% | 29.6% | 26.1% | 9.8% |
| |
|---|
| Median (13 companies) | 7.3% | 4.7% | 6.9% | 9.9% | 9.5% |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
| |
|---|
| Median (11 companies) | 0.3x | 0.6x | 0.8x | 0.3x | 0.1x |
|---|
| Accenture plc ($ACN) | -0.9x | -0.8x | -0.7x | -0.8x | -0.6x |
