$ACN is a Buy. A Prime Investment Opportunity……..
Accenture (NYSE: ACN) just released its third-quarter fiscal 2025 earnings report, and it’s a standout moment for investors. With impressive revenue growth, expanded margins, and an upbeat full-year outlook, Accenture is proving its mettle in a competitive landscape. This blog post dives into the highlights of this robust quarterly report, evaluates the company’s intrinsic value using the Buffett and McGrew Valuation Methods, and explains why ACN is an attractive investment at its current price. #Accenture #Q3Earnings #Investing #StockMarket
Q3 FY25 Earnings: A Powerhouse Performance
On June 20, 2025, Accenture reported Q3 FY25 results that underscore its strategic strength. Revenues reached $17.73 billion, up 8% in U.S. dollars and 7% in local currency from Q3 FY24. Growth was broad-based across all geographic markets, industry groups, and service types, with Financial Services shining at 13% growth and Managed Services up 9%. The company’s leadership in generative AI drove $1.5 billion in new bookings, cementing its role at the forefront of technological innovation. #GenerativeAI #TechInvesting
The GAAP operating margin climbed to 16.8%, an 80-basis-point increase over Q3 FY24’s GAAP margin and 40 basis points above the adjusted margin, reflecting tight cost control. GAAP diluted earnings per share (EPS) jumped 15% to $3.49, a 12% rise over adjusted EPS, fueled by higher revenues, a lower tax rate, and share repurchases. Free cash flow (FCF) surged to $3.52 billion, up from $3.02 billion in Q3 FY24, showcasing Accenture’s cash-generating prowess. #Earnings #CashFlow
Shareholders reaped rewards with a 15% dividend hike to $1.48 per share and $1.8 billion in share repurchases (6 million shares). Accenture raised its FY25 outlook, projecting FCF of $9.0–$9.7 billion, revenue growth of 6–7% in local currency, and EPS of $12.77–$12.89, a 12–13% increase over FY24 GAAP EPS. This optimism signals strong demand for Accenture’s services. #Dividend #ShareBuyback
Valuation Analysis: Buffett and McGrew Methods
To gauge ACN’s investment potential, I applied the Buffett and McGrew Valuation Methods, using five years of FCF data (FY 2021–2025) from Accenture’s financials, including the latest Q3 FY25 earnings. FCF figures are $8.40 billion (2021), $8.82 billion (2022), $9.00 billion (2023), $8.61 billion (2024), and an estimated $9.35 billion for FY25, based on guidance. Average shares outstanding were 624.69 million, reflecting ongoing share repurchasing.
Buffett Valuation Method: With a 3-year FCF CAGR of 1.95% and a 5-year CAGR of 2.72% (both ≤ 10%), Accenture is a stable stock, warranting a 5% growth rate for Years 1–10. Starting with FY25 FCF of $9.35 billion, I projected FCF over 10 years, calculated a terminal value with a 2.5% perpetual growth rate and 8% discount rate, and discounted cash flows. The total present value of $217.38 billion, divided by 624.69 million shares, yields an intrinsic value of $347.96 per share. With a 25% margin of safety, the target price is $260.97.
McGrew Valuation Method: The 5-year FCF CAGR (2.72%) being ≤ 10% means the McGrew method mirrors the Buffett method for non-growth stocks, using a 5% growth rate. The result is the same: an intrinsic value of $347.96 and a margin-of-safety price of $260.97.
The valuation results are summarized below:
| Stock Ticker | Valuation Method | Intrinsic Value per Share | Price with 25% Margin of Safety | Last Closing Price | Valuation Status |
|---|---|---|---|---|---|
| ACN | Buffett Valuation | $347.96 | $260.97 | $306.37 | Buy |
| ACN | McGrew Valuation | $347.96 | $260.97 | $306.37 | Buy |
Investment Outlook: ACN is a Buy
At a last closing price of $306.37 (assumed for June 19, 2025), ACN is 11.95% below its intrinsic value of $347.96, earning a Buy rating (7–25% below intrinsic value). This marks an improvement from a prior “Hold” based on older data, driven by stronger FCF and an enhanced outlook. The stock’s current price offers a discount for investors seeking a high-quality company. #ValueInvesting #StockAnalysis
Accenture’s Q3 results and raised guidance highlight its ability to thrive amid economic challenges while capitalizing on trends like digital transformation and AI. Growth across Americas (9%), EMEA (6%), and Asia Pacific (4%), plus 30 clients with bookings over $100 million, ensures stability. Its focus on high-margin services and efficiency supports long-term profitability. #DigitalTransformation #AI
Risks and Considerations
Despite the bullish outlook, risks persist. The earnings release flags potential headwinds from economic volatility, competition, and cybersecurity risks. The Q4 FY25 FCF estimate ($2.28 billion) depends on guidance and could vary. The unverified $306.37 closing price introduces uncertainty, as a prior dataset suggested a higher price (~$348.56 in February 2025). Investors should watch for market reactions post-earnings. #InvestmentRisks
Conclusion: A Prime Investment Opportunity
Accenture’s Q3 FY25 earnings report cements its status as a cash-rich, innovation-driven leader. With strong revenue growth, margin gains, and a raised FY25 outlook, ACN is poised for sustained success. The Buffett and McGrew valuations confirm an intrinsic value of $347.96 per share, making $306.37 a steal. For those seeking growth, stability, and shareholder value, Accenture is a Buy.
#Accenture #Q3Earnings #Investing #StockMarket #GenerativeAI #TechInvesting #Earnings #CashFlow #Dividend #ShareBuyback #ValueInvesting #StockAnalysis #DigitalTransformation #AI #InvestmentRisks #BuyACN #StockPicks
