Accenture plc (ACN): what the price assumes
In the published model solve dated 2026-Q2, anchored at $189.61, Accenture plc (ACN) is priced for -2.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.
Generated: 2026-08-30 · Source: https://boothcheck.com/report/ACN
Headline
| Field | Value |
|---|---|
| Ticker | ACN |
| Company | Accenture plc |
| Sector / Industry | Consumer Cyclical |
| Current price | $189.61/sh |
| Composition | Communications, Media & Technology 16% / Financial Services 18% / Health & Public Service 21% / Products 30% / Resources 14% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 5.5% |
| Operating margin today | 14.5% |
| Margin compression (value-band) | -9.0pp |
| Implied growth | -2.0% |
| Multiple paid | 11x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -1.58σ |
| cohort percentile (of 212 peers) | 19 |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.40x | 5 | expensive |
| Earnings | 1.27x | 5 | expensive |
| Relative | 0.72x | 3 | justifies |
| Growth | 1.00x | 4 | justifies |
Families that justify the price: Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $468.35 | 0.40x | yes | FCF base $13.3B, growth 7% (input: historical growth), terminal g 4.0%, WACC 9.0%, 5yr projection |
| DCF Exit Multiple | Growth | $253.19 | 0.75x | yes | Exit EV/EBITDA: 7.9x / 9.9x / 11.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $266.00 | 0.71x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.8x / 20.0x / 23.2x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $94.52 | 2.01x | yes | Stage 1: -1% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $135.54 | 1.40x | yes | BV/sh $51.33, ROE (TTM) 24.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $220.88 | 0.86x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $152.64 | 1.24x | yes | Rev $73.1B, growth 7% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $149.18 | 1.27x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $10.24B × (1−24%) / WACC 9.0% → EPV (no growth) |
| Residual Income | Asset | $199.43 | 0.95x | yes | BV $51.33 + 5yr PV of (ROE (TTM) 24.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $120.24 | 1.58x | yes | √(22.5 × EPS $12.52 × BVPS $51.33) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $264.19 | 0.72x | yes | EBITDA $11.24B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $229.87 | 0.82x | yes | FCF $12581.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $193.60 | 0.98x | yes | SBC-adj FCF $10.50B (FCF $12.58B − SBC $2.08B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $68.08 | 2.79x | yes | EPS $12.52 × (8.5 + 2×-1.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $54.50 | 3.48x | yes | BV $51.33 × (ROIC 9.6% / WACC 9.0%) |
| P/Sales Sector | Relative | $176.48 | 1.07x | yes | Revenue $73.10B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $135.35 | 1.40x | yes | EPS $12.52 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $5.1b |
| Net debt / NOPAT (after-tax) | -0.64x (net cash) |
| Net debt / operating income (pre-tax) | -0.49x (net cash) |
| Interest coverage | 39.8x |
| Share count CAGR (buyback) | -1.0% |
| Burning cash | no |
Bullet Takeaways
- Products is the largest of the five industry groups at 30% of revenue, ahead of Health & Public Service at 21% and Financial Services at 18%, so no single client vertical decides the outcome.
- Order intake is the pressure point rather than profitability: fiscal 2025 closed with "new bookings of $80.6 billion, a decrease of 1% in both U.S. dollars and local currency", and the U.S. federal business has since been absorbing procurement delays and contract cancellations.
- The fiscal year ends on August 31, 2026, and the report that follows it is the first clean look at whether the trimmed full-year outlook held.
Bull Case
Very little of what Accenture actually owns appears on its balance sheet. The company spends its way to competitive position and expenses almost all of it: in fiscal 2025 "we invested $1.5 billion across 23 strategic acquisitions, $0.8 billion in R&D, and approximately $1.0 billion in learning and professional development". That last line is the interesting one. A billion dollars a year teaching several hundred thousand people new skills is capital expenditure in every sense except the accounting one, and because it runs through the income statement, reported book value of $51.80 per share describes a fraction of what has been built. Any method that values this company off book value is measuring the wrong asset.
The workforce is the asset, and it is being retooled deliberately rather than defensively. The filing puts a number on it: "We also continue to steadily increase our AI and data workforce, reaching approximately 77,000 skilled AI and data practitioners at the end of fiscal 2025". Set against a client base that is trying to work out what to do about the same technology, a practice of that size is the product. Enterprises buying artificial intelligence are not buying software licences; they are buying somebody to redesign a claims process, a supply chain or a general ledger around it. That work is labour, it is slow, and it is exactly what this firm sells.
The economics behind it are better than the reported profitability suggests. Trailing operating profit runs at 14.5% of revenue on a $73.1 billion base, and return on equity of 24.4% is achieved with essentially no borrowing: operating profit covers the interest bill about 39.6 times. Free cash flow is the number that matters in a business with no factories, and last year it ran comfortably ahead of reported profit: $12.58 billion against $7.79 billion of net income. That happens when a company collects from clients faster than it books the revenue and owns almost nothing that needs replacing. Money of that quality funds acquisitions, dividends and buybacks simultaneously, and the buyback is not a press release: during fiscal 2025 the company cancelled 22,738,965 Class A ordinary shares held in treasury, and the count has fallen about 1.0% a year over the four years to May 2026.
Scale in this market is not decoration, it is the qualification. Cognizant's own filing lists the field it competes against, naming "Capgemini, CGI, Deloitte Digital, DXC Technology, EPAM Systems, Genpact, HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro", and Accenture is larger than any of them in this cohort. When a global bank decides to rebuild its core platform, the shortlist of firms that can staff the programme across twenty countries at once is short. That is why the very large contracts keep concentrating: Accenture reported 104 client bookings of $100 million or more in the first three quarters of fiscal 2026, up 13%, even while total order intake slipped.
The management record supports being patient with all of this. Since 2009 the company has raised its outlook on 24 occasions against a single cut, and of the seven revenue guides that could be scored against reported results, it delivered on all seven. Combine that with an industry position no competitor in the group can replicate quickly and a valuation that every standard method already supports, and the bull case does not need a story about reacceleration. It needs the business to keep doing roughly what it does.
Bear Case
Order intake leads revenue in this industry by about a year, and order intake has stopped growing. Fiscal 2025 ended with "new bookings of $80.6 billion, a decrease of 1% in both U.S. dollars and local currency", and third-quarter fiscal 2026 bookings fell a further 2% in dollars and 3% in local currency. Revenue is still growing because "managed services bookings, which are typically for multi-year contracts" convert slowly, which is precisely the mechanism that makes a services business look fine for several quarters after demand has turned. Profitability confirms the pressure at the edges: the company reported "Operating margin of 14.7%, a decrease from 14.8% in fiscal 2024".
The government business is a live wound rather than a risk factor. Discussing the U.S. federal effort to cut spending, the 10-K reports impacts "including delays in new procurements, reductions in price and contract scope, and contract terminations". That is not a forward-looking caution; it is a description of what already happened. Management put roughly a percentage point of full-year revenue growth on the federal account when it trimmed the fiscal 2026 outlook. Health & Public Service is 21% of revenue. A buyer who assumes the public-sector cycle mean-reverts on a normal schedule is assuming something about politics, not about Accenture.
Then there is the shape of the workforce itself. The company describes the lever it uses when demand moves with unusual candour: "we adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand". In the fourth quarter of fiscal 2025 it went further, beginning a programme that includes "exiting people in a compressed timeline where reskilling is not a viable path for the skills we need". Read that alongside the AI practice the bull case celebrates and a less comfortable reading appears: the skills mix is turning over fast enough that a material share of the existing base cannot be carried forward. A firm whose cost base is people, whose revenue is hours, and whose clients are being sold automation has an obvious structural question to answer, and nothing in the trailing numbers answers it yet.
Competition is intensifying at both ends of the price range. Among the same peer group, DXC states the position plainly in its own filing: "We face aggressive price competition and may have to lower prices to stay competitive". On profitability Accenture is not even the leader of this cohort, with Cognizant earning a 15.8% operating margin against Accenture's 14.5%, while EPAM is growing revenue 14.2% from a far smaller base. Accenture also competes for the same scarce staff: "There is competition for scarce talent with market-leading skills and capabilities in new technologies, and our people have been directly targeted because of their highly sought-after skills".
The awkward part of this bear case is that it cannot be an argument about the price. Every standard approach to valuing the company already lands at or above $147.05, and the trailing multiple sits in the cheaper half of the peer group. So the bear thesis has to be that the market is right to discount, and the reason would be that trailing profit is peak-cycle profit for a labour-leveraged model facing a technology that reduces the hours required per unit of client outcome. If that is true, the earnings the cheap multiple is applied to are the problem, not the multiple. Cheapness is not protection when the denominator is the thing in question.
Valuation
The unusual feature here is the absence of disagreement. Asset-based approaches, capitalized earning power, peer ratios and forward cash-flow projections normally scatter across a wide range for a company this size, and for Accenture they do not: all of them land at or above $147.05, observed on July 25, 2026. The peer-multiple lens is the most emphatic, putting the price at roughly half what applying sector ratios to this profit and this revenue would support. When every method agrees a price is defensible, the interesting question stops being valuation and becomes why the market disagrees with all of them at once.
The arithmetic of the multiple makes the point concretely. Buying the whole enterprise at today's price costs about 8.4 times trailing operating profit. Reconciled against a cost of capital near nine percent, that price sits beneath what even a steady annual contraction in operating profit of five percent would justify. In other words the market is not paying for growth here at all; it is paying less than a shrinking version of this business would be worth. That is a strong statement, and it is worth being precise about what it is not: it is a bound rather than a forecast, and it says nothing about whether the profit stream is durable.
Durability is where the section turns, because the numbers behind the multiple are unusually clean. Revenue of $73.1 billion converts at a 14.5% operating margin, in line with the "Operating margin of 14.7%, a decrease from 14.8% in fiscal 2024" the company reported for the full fiscal year, and free cash flow of $12.58 billion exceeds reported net profit. Stock-based compensation of $2.08 billion is the largest deduction anyone would reasonably want to make, and taking it out still leaves over ten billion dollars a year. There is no accrual gap to worry about here, which is what separates this situation from most cheap-looking stocks: the earnings are collected, not estimated.
Cohort position reinforces rather than complicates the read. Among the peers Cognizant earns a 15.8% operating margin on $21.4 billion of revenue with growth of 6.5%; DXC manages 7.7% on $12.6 billion with revenue falling 1.8%; EPAM runs 9.7% on $5.56 billion while growing 14.2%. Accenture sits near the top of that group on profitability and is several times larger than any of them, yet its multiple falls in the cheaper half of the same set. The market is applying a below-average multiple to an above-average operator, which is either an opportunity or a judgement about the direction of the whole industry.
The balance sheet removes the usual complications. There is effectively no leverage question: operating profit covers the interest bill about 39.6 times, and the company holds more liquid assets than borrowings. What that buys is time. If order intake stays soft for another year, nothing on the financing side forces a decision, and the buyback that retired about 1.0% of the share count annually over the four years to May 2026 can continue against a lower price. The whole case rests on one question the numbers cannot settle, which is whether hours billed is a shrinking unit of account.
Catalysts
The most recent quarter contained the event that repriced the stock. Third-quarter fiscal 2026 revenue grew 6% with earnings per share up 9%, but new bookings came in at $19.32 billion, down 2% in U.S. dollars and 3% in local currency, split between consulting work of $10.26 billion and managed services of $9.06 billion. Management trimmed the full-year revenue growth outlook to 3% to 4% in local currency from a prior 3% to 5%, and attributed roughly a percentage point of the drag to the U.S. federal business. The shares fell sharply on the release.
Underneath the cut, the large-deal engine kept running. The company reported 104 client bookings of $100 million or more year to date, up 13%, which is the pattern of a market consolidating toward the few firms able to staff programmes at that size even as the aggregate spend softens. Full-year guidance for earnings per share of $13.78 to $13.90 and free cash flow of $10.8 billion to $11.5 billion was maintained alongside the revenue reduction, so the pressure being described is a demand-volume issue rather than a profitability one.
Two things to watch from here. The fiscal year closes on August 31, 2026, and the fourth-quarter report that follows is the first look at whether bookings have stabilised at the new level or continued to slide; a second consecutive year of falling order intake would make the revenue path for fiscal 2027 difficult regardless of profitability. The second is acquisition behaviour. Alongside the third-quarter results the company announced the purchases of Dragos, runZero and NetRise, all in operational-technology security, which is where it is choosing to spend while organic demand is soft.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- CTSH (COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION)
- FY2025 10-K: , Capgemini, CGI, Deloitte Digital, DXC Technology, EPAM Systems, Genpact, HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete with numerous smaller local companies in the various geographic markets in which we operate. For additional information, see…
- FY2025 10-K: …to conform to the new methodology, it is impracticable for us to recast our 2023 segment operating results as the detailed information required for the allocation of such costs to the segments is not reasonably available. Segment operating profit and operating margin percentage were as follows: Segment operating…
- DXC (DXC Technology Co)
- FY2025 10-K: …variations do not materially affect our long-term performance, they may contribute to periodic fluctuations in revenue, expenses, and profitability. We continue to monitor these trends and adjust our operations as needed to optimize performance throughout the year. Competition The IT and professional services markets…
- FY2025 10-K: …alliance partners, our business and results of operations could be adversely affected. We face aggressive price competition and may have to lower prices to stay competitive, while simultaneously seeking to maintain or improve revenue and gross margin. This price competition may continue to increase from emerging…
- EPAM (EPAM SYSTEMS, INC.)
- FY2025 10-K: …operations. If we are unable to compete successfully against others in our industry, pricing pressures or loss of market share could have a material adverse effect on our business. The market for our services is highly competitive and we expect competition to persist and intensify, especially as we and our…
- FY2025 10-K: …in the Fortune 1000 and to be included as a leader in the IDC MarketScapes for Worldwide Experience Build Services and Worldwide Experience Design Services. Competition The markets in which we compete are changing rapidly and we face competition from multiple market participants such as other global technology…
- WIT (WIPRO LIMITED)
- (no filing in the citation store)
- IBM (INTERNATIONAL BUSINESS MACHINES CORP)
- FY2025 10-K: …revenue percent change for Strategy and Technology and Intelligent Operations. These changes did not impact our Consolidated Financial Statements or our reportable segments. The following table presents each reportable segment's revenue and gross margin results, followed by an analysis of the 2025 versus 2024…
- FY2025 10-K: …33.1 % 32.1 % 1.0 pts. Software gross profit margin of 83.5 percent in 2025 decreased 0.2 points compared to the prior year. Segment profit of $9,920 million increased 14.2 percent and segment profit margin of 33.1 percent increased 1.0 points compared to the prior year. The year-to-year increases in segment profit…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Accenture third-quarter fiscal 2026 earnings release, June 2026