Deck
Accenture is a global professional-services firm that bills clients for consulting, technology and managed-services work — strategy, systems integration, and running operations — across more than 120 countries.
A steady compounder has de-rated hard — even as margins, earnings and cash keep hitting records
- The de-rate. Shares slid from roughly $201 in early April 2026 to a $124 low by late June, now near $142 — about 11× adjusted EPS of $12.93, a multiple more often attached to a struggling business than a record year.
- The fundamentals held. Through the sell-off, FY2025 delivered record revenue of $69.7B (+7%), an adjusted operating margin of 15.6% — a third straight year of expansion — and record free cash flow of $10.9B.
- The catch. Growth is guided to slow, not reaccelerate: new bookings fell 1% in FY2025 and 2% again in the third quarter of FY2026, with book-to-bill hovering near 1.2 — the leading indicator is soft.
Margin and cash are the reliable engine — not the top line
Adjusted operating margin has ground higher about 10 basis points a year, by design; the noisier GAAP line (14.7% in FY2025) mostly reflects lumpy business-optimization charges — $1.06B in FY2023, $438M in FY2024, $615M in FY2025. Cash conversion runs above net income, and buybacks that shrink the share count roughly 1% a year add a further point or so to EPS growth.
A slowdown that ended, and a recovery that is real but modest
FY2023 — strong growth, weak optics. Revenue rose 8% in local currency but only 4% in dollars, and a $1.06B severance charge dragged GAAP operating margin to 13.7%. On an adjusted basis, margin actually expanded to 15.4% and EPS grew 9% to $11.67.
FY2024 — the air pocket. Growth collapsed to 2% in local currency as clients froze discretionary consulting. Bookings held up — new bookings jumped 13% to $81.2B — but revenue would not convert, and adjusted EPS grew just 2%.
FY2025 — AI-led reacceleration. Revenue reaccelerated to 7%, with generative-AI bookings nearly doubling to $5.9B and related revenue tripling to $2.7B. Yet total bookings still fell 1% — leaving open whether the reacceleration sticks.
FY2026 is largely de-risked and guided to decelerate; FY2027 rests on stabilization
- FY2026 guidance. With three of four quarters reported, management guides to 3%–4% local-currency growth (4%–5% excluding an estimated 1-point U.S. federal drag), an adjusted operating margin of 15.8%, and adjusted EPS of $13.78–$13.90.
- FY2027 base case. There is no company guidance; a model holding growth near 4% with one more notch of margin lands adjusted EPS around $14.65 — roughly in line with external consensus near $14.67, which has been drifting lower rather than higher.
- Capital return. Guidance calls for $10.8B–$11.5B of free cash flow again and at least $9.5B returned via dividends and buybacks — the mechanism that lifts per-share numbers even when revenue growth is slow.
Durable profitability at a de-rated price, against a softening top line
- What supports it. Three years of steady margin expansion, record $10.9B free cash flow, an ~11× multiple that already prices in pessimism, and AI work scaling fast off a $3B multi-year investment.
- What cuts against it. Bookings have fallen two years running with book-to-bill near 1.2, the U.S. federal business is a live drag, and the same AI demand could erode the billable labor hours Accenture sells.
- Where it breaks. If bookings do not re-accelerate, the ~4% FY2027 growth assumption is the first thing to cut — margin and cash can hold while the top line disappoints.
Watchlist to re-rate: New bookings and book-to-bill each quarter; the size and duration of the U.S. federal pullback; and whether advanced-AI work stays net-additive to bookings rather than deflating the hours Accenture bills.