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Accenture Tops Q2 Estimates with Record Bookings, Raises Full-Year Outlook
Accenture (ACN) reported its fiscal second-quarter 2026 results, beating analyst expectations. The company showed it can turn strong client demand into solid revenue and profit growth. Revenue hit $18.0 billion, up 8% year-over-year in U.S. dollars and topping the consensus estimate of $17.83 billion. This was driven by record second-quarter bookings of $22.1 billion, a 6% increase in U.S. dollars. A record 41 clients each brought in over $100 million in quarterly bookings. Earnings per share rose 4% to $2.93, beating analyst forecasts of $2.85-$2.87. The operating margin improved by 30 basis points to 13.8%, showing better efficiency. Free cash flow was a strong $3.7 billion.
With these strong results and market momentum, Accenture increased its full-year fiscal 2026 outlook. It now expects revenue to grow 4% to 6% in local currency, not counting its U.S. federal business. Full-year GAAP diluted earnings per share are now projected between $13.25 and $13.50, a 9% to 11% increase. Adjusted earnings per share are forecasted between $13.65 and $13.90. Free cash flow expectations were also raised, now projected between $10.8 billion and $11.5 billion. These increases stem from a greater focus on scaling AI capabilities for clients, a key growth driver in consulting.
Stock Trades at Deep Discount Despite AI Growth
Despite its strong performance and higher guidance, Accenture's stock trades at a notable discount to its historical valuation. As of mid-March 2026, its Price-to-Earnings (P/E) ratio is around 16.0x to 16.9x. This is well below its 10-year average of about 26.38x and its 5-year average of 28.53x. Accenture's P/E has dropped over 30% compared to its average of the last four quarters. The stock price has also fallen roughly 40% in the past 12 months, trading near its 52-week low of $188.73. This discount continues even as the AI consulting market grows rapidly, expected to reach $233 billion by 2035 from $30 billion in 2026. While other IT services firms may have lower P/E ratios, Accenture's current multiple suggests investors foresee more future uncertainty or slower growth than its history or the booming AI market might indicate.
Analysts Temper Outlook, Cut Price Targets
Analysts generally rate Accenture a 'Moderate Buy'. However, recent analyst moves show more caution about the stock's near-term potential. Several major firms have significantly cut their price targets in March 2026, even while maintaining positive overall ratings. For example, TD Cowen lowered its target to $275 from $282, Morgan Stanley cut its target from $320 to $240, and Truist Securities reduced its target from $317 to $260. These cuts, despite the strong Q2 earnings, suggest analysts are considering the lower P/E ratios and challenges in the competitive tech services sector. Additionally, the last 90 days saw 20 negative EPS revisions, showing downward pressure on earnings forecasts even as the company raised its own guidance.
Concerns Linger: Insider Selling, Legal Issues, and Rivalry
Despite strong quarterly results, persistent concerns temper investor enthusiasm. Significant insider selling has occurred, with executives like CEO Julie Sweet selling large amounts of their shares. Past controversies linger, including a $63.6 million settlement in 2011 over allegations of false claims, kickbacks, and bid-rigging on federal IT contracts. More recently, a lawsuit alleged discrimination over gender parity goals, and previous accusations have raised issues about workplace matters and ethics in client projects. While Accenture highlights its AI capabilities and growth strategies, increasing competition in AI consulting from specialized firms and tech giants threatens its market share and pricing power. The current valuation discount may signal market skepticism about Accenture's ability to maintain its historical growth and margins in this competitive landscape, especially with analysts cutting price targets.