Accenture Braces for Foreign-Exchange Impact, but Systemic Drivers Strong; Shares Fairly Valued

Wide-moat Accenture reported a mixed third quarter, beating our revenue expectation while missing our earnings per share estimate as a result of exiting business in Russia. The company lowered the high end of its EPS forecast range for the year to reflect foreign-exchange headwinds. Given that the adjustment is due to drivers outside Accenture's control, we are unfazed by it, as we expect the impact to be temporary. We are maintaining our fair value estimate at $258 per share. The stock is down slightly after the earnings release, leaving Accenture trading in 3-star territory. While we think the market is accurately pricing the stock, FactSet consensus remains divergent from us at $371 per share due to greater top-line expectations. We believe our forecast for a revenue compound annual growth rate of 9% over the next five years fairly reflects Accenture's growth potential, inorganically as well as via strong digital transformation tailwinds. We do not bake in additional growth past our 9% CAGR, as we think that Accenture's pricing lever can only go so far in a weaker macroeconomic environment.