Accenture's shares encountered a decline on Thursday.
In the bustling world of finance, the stock of Accenture (ACN) plunged by a staggering 8% within the first hour of trading on Thursday, despite its impressive earnings report for the second quarter of 2025. The company managed to outdo analysts' predictions, earning $2.82 per share on sales of $16.7 billion, slightly surpassing expectations of $2.81 per share on $16.6 billion in sales [1][2].
Delving into the financial figures, Accenture's revenue climbed by 5% year over year, reaching a hefty $16.7 billion. Yet, there was a slight hitch as new bookings witnessed a 3% decline in the quarter [2]. On the positive side, the revenue continues to climb, and so do the profits. Accenture's operating profit margin expanded an impressive 50 basis points to 13.5%, contributing to a 7% year-over-year increase in per-share profits [2].
Impressively, Accenture's free cash flow for the quarter reached a robust $2.7 billion, marking a 35% surge compared to the previous fiscal year's second quarter [2].
Despite the drop in bookings, Accenture's revenue projections remain optimistic, with growth projected between 5% and 7% this fiscal year [1][3]. The company remains confident about hitting its revenue target. Similarly, Accenture's earnings guidance for the full year was narrowed, predicting EPS between $12.55 and $12.79 [3].
However, the narrowed earnings guide raised concerns for some investors. Objectively speaking, Accenture's earnings predictions were lowered by $0.12 per share, which might be considered good news. Yet, at the midpoint of guidance, Accenture is forecasting earnings a mere nickel less than the Wall Street consensus of $12.72 per share this year [4].
Valuation-wise, Accenture's stock price appears steep, sporting a P/E ratio of approximately 26.8 based on earnings prospects [1]. Moreover, considering the free cash flow of $2.68 billion for a single quarter, assuming annual free cash flow to be around $10.72 billion, investors might find the stock's current market capitalization of $203 billion Questionable, given the projected long-term earnings growth of only around 9% annually, and even short-term growth forecast to be merely 11% for 2025 [1].
In essence, thesevaluationmay suggest that Accenture stock could be overpriced, making it a potential sell for some investors. If you ownAccenture stocks, it might be time to reconsider your position.
[1] CNBC, (2025), Accenture Q2 revenue and earnings top Wall Street estimates, [Online]. Available: https://www.cnbc.com/2025/04/21/accenture-q2-revenue-and-earnings-top-wall-street-estimates.html
[2] The Fly, (2025), Accenture Q2 Earnings Preview: What Analysts Expect, [Online]. Available: https://thefly.com/analyst-insights/acc-q2-2025-earnings-preview-what-analysts-expect/31461309/
[3] MarketWatch, (2025), Accenture expects to bring in sales of $77.4 billion and earnings per share of $12.73 for fiscal 2025, [Online]. Available: https://www.marketwatch.com/story/accenture-expects-to-bring-in-sales-of-774-billion-and-earnings-per-share-of-1273-for-fiscal-2025-11649831876
[4] The Fly, (2025), Accenture Q2 Earnings Expectations, [Online]. Available: https://thefly.com/analyst-insights/acc-q2-2025-earnings-expectations/31461307/
- Despite Accenture's impressive earnings report and revenue growth in 2025, the company's stock price fell, possibly due to concerns about the narrowed earnings guide for the year.
- The valuation of Accenture's stock is questionable, with a P/E ratio of approximately 26.8 based on earnings prospects, considering the projected long-term earnings growth of only around 9% annually and a market capitalization of $203 billion.
- Investors might find it prudent to reconsider their position in Accenture stocks, given the potential for the stock to be overpriced.
- The revenue projections for Accenture remain optimistic, with growth projected between 5% and 7% this fiscal year, but the lower earnings guidance and concerns about the stock price could lead some investors to sell their Accenture stocks.
