Last update on 2024-06-06

Accenture (ACN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Accenture's Piotroski F-Score for 2023 is 7/9, showcasing its financial strength through positive income, cash flow, and growing liquidity. Critical investor insight.

Short Analysis - Piotroski Score: 7

We're running Accenture (ACN) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is used to evaluate the financial strength of a company. It's based on 9 criteria related to profitability, liquidity, and operating efficiency. Accenture (ACN) was analyzed and received a score of 7 out of 9, which is good. Accenture has strong profitability with consistent positive net income and growing cash flow from operations. However, its Return on Assets (ROA) has decreased and leverage has slightly increased, which could be potential concerns. The company also shows good short-term financial health and has reduced its shares outstanding, returning value to shareholders. Additionally, its gross margin has slightly increased, but its asset turnover ratio has decreased, suggesting some inefficiency in using its assets to generate revenue.

Insights for Value Investors Seeking Stable Income

Accenture (ACN) has a strong Piotroski F-Score, indicating it’s generally a solid company with good financial health. Despite some concerns with ROA and asset turnover, its overall profitability and cash flow stability, along with good liquidity and efforts to increase shareholder value, make it a worthwhile stock to consider. Investors should keep an eye on the efficiency issues and leverage but overall, it appears to be a strong candidate for investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Accenture (ACN)

Company has a positive net income?

Analyzing net income stability provides insight into a company's profitability and operational efficiency.

Accenture (ACN) has posted a net income of $6.87 billion in 2023, marking two decades of consistent profitability. This trend is a positive indicator of financial health and operational competency. Accenture has demonstrated the capacity to sustain and grow profits over the years, thereby earning 1 point in the Piotroski score for this criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash a company generates from its regular business operations, which indicates its ability to fund operating costs, pay down debt, and reinvest in the business.

The CFO for Accenture (ACN) in 2023 was a positive $9,524,268,000. This is a sign of robust operational health and earnings quality. Over the last 20 years, Accenture's CFO has shown a significant upwards trend starting from $1,513,108,000 in 2003, reflecting consistent growth. The continuous increase in CFO underscores Accenture's ability to generate cash from its core operations, making it a financially stable entity. Positive CFO in 2023 adds 1 point in the Piotroski score, highlighting financial strength.

Return on Assets (ROA) are growing?

Change in ROA

Comparing the Return on Assets (ROA) figures for Accenture, it is observed that the ROA decreased from 0.1521 in 2022 to 0.1395 in 2023. This decline is notable, as it suggests that Accenture was less efficient in generating profit relative to its assets in 2023 compared to 2022. Hence, Accenture scores 0 on this criterion. The 20-year historical data shows substantial fluctuations, with peaks and troughs that mirror broader economic conditions and the tech industry's cyclical nature. For instance, the industry median ROA decreased significantly during the 2008 financial crisis. Additionally, while Accenture's operating cash flow has generally been increasing, the recent dip in ROA could be an indicator of rising costs, decreased margins, or other underlying inefficiencies.

Operating Cashflow are higher than Netincome?

Operating Cash Flow should ideally be higher than Net Income, indicating that the company's core operations are generating ample cash, which is a sign of financial health.

For 2023, Accenture (ACN) has an Operating Cash Flow of $9.52 billion compared to a Net Income of $6.87 billion. This translates to a favorable ratio, showcasing the firm's effective management and strong operational performance. Historically, this trend has been consistent, with Operating Cash Flow traditionally outpacing Net Income—a positive indicator for investors and stakeholders. Thus, Accenture earns 1 point here.

Liquidity of Accenture (ACN)

Leverage is declining?

Change in Leverage examines the variation in a company's debt-to-assets ratio over periods. A reduction in leverage suggests improved financial health and less dependence on debt.

Based on the data, Accenture's leverage rose from 0.0459 in 2022 to 0.0552 in 2023, indicating increased reliance on debt. Despite the minor year-on-year increase, when viewed historically over the past two decades, leverage has been exceptionally low, with significant spikes only in recent years. This trend merits close attention, especially since leverage had remained near zero for several years in the early 2000s. The upward trend since 2017 suggests a potentially growing dependence on debt. No point added for this criterion.

Current Ratio is growing?

The Current Ratio evaluates a company's ability to cover its short-term obligations with its short-term assets. A higher ratio could indicate good short-term financial health.

Accenture's Current Ratio has increased from 1.2333 in 2022 to 1.2983 in 2023. This marks an improvement in the company's ability to cover short-term liabilities with its short-term assets, suggesting enhanced liquidity. Over the last 20 years, the average industry median current ratio has mostly remained above Accenture's current ratio, but the increase in 2023 is a positive sign. Thus, for this criterion, Accenture scores 1 point, reflecting its improved short-term financial health.

Number of shares not diluted?

Significant changes in shares outstanding can affect shareholder value. A decrease may indicate buybacks, increasing per-share metrics; an increase may indicate dilution.

In comparing the outstanding shares of Accenture (ACN) between 2022 and 2023, we see a decrease from 632,762,710 shares to 630,608,186 shares. This reduction in shares outstanding is generally viewed positively as it indicates share repurchases, which return value to shareholders and increase earnings per share. Over the last 20 years, Accenture has consistently reduced its outstanding shares, moving from 996,754,596 shares in 2003 down to 630,608,186 in 2023. This steady trend of share reduction demonstrates the company’s commitment to shareholder value through buybacks. Therefore, Accenture earns a point for this criterion, as the outstanding shares have decreased in 2023.

Operating of Accenture (ACN)

Cross Margin is growing?

Change in Gross Margin is a critical indicator of a company's core profitability. It measures the proportion of money left over from revenues after accounting for the cost of goods sold, thus highlighting the efficiency of a firm's core business.

The Gross Margin for Accenture (ACN) shows a modest increase from 31.99% in 2022 to 32.34% in 2023, earning it a score of 1 in the Piotroski analysis. This slight uptick is a positive trend, especially when examined over a 20-year period, where fluctuations have been relatively minor and the margin has shown a consistent performance. Compared to the industry median, which stands at 33.91% in 2023, Accenture is slightly below. However, it is worth noting that the industry median has demonstrated more volatility over the years. This consistent gross margin reflects Accenture's stable cost management and pricing strategy.

Asset Turnover Ratio is growing?

Change in Asset Turnover helps to assess a company's efficiency in using its assets to generate sales or revenue from one year to the next.

The Asset Turnover for Accenture (ACN) stands at 1.3016 in 2023 compared to 1.3621 in 2022. This represents a decrease in Asset Turnover. Unlike what is crucial here—an increase, to signify improved efficiency and thus earn a point on the Piotroski scale—the decrease indicates a slight deterioration in how well the company uses its assets for generating revenue. Historically, the Asset Turnover ratio for Accenture has mostly seen a declining trend from 2.2444 in 2003 to current figures. This warrants attention given its descent over the long term, signalling potential efficiency issues that need addressing.