DCF Studio

    ACN · NYQ · Technology

    Accenture plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 191.42

    Market price

    USD 181.29

    Implied upside

    +5.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.91% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 191.42+5.6%
    Exit multiple
    USD 190.25+4.9%
    Market price
    USD 181.29

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn5bn9bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 72.6bnUSD 75.6bnUSD 78.8bnUSD 82.1bnUSD 85.6bn+4.2%
    EBITUSD 11.2bnUSD 11.7bnUSD 12.1bnUSD 12.7bnUSD 13.2bn+4.2%
    NOPATUSD 8.8bnUSD 9.2bnUSD 9.6bnUSD 10.0bnUSD 10.4bn+4.2%
    Add depreciation & amortisationUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+4.2%
    Less capital expenditureUSD -725.9mUSD -756.4mUSD -788.1mUSD -821.2mUSD -855.6m+4.2%
    Less increase in working capitalUSD -1.4bnUSD -1.4bnUSD -1.5bnUSD -1.6bnUSD -1.6bn+4.2%
    Free cashflow to firmUSD 8.0bnUSD 8.3bnUSD 8.7bnUSD 9.0bnUSD 9.4bn+4.2%
    Discount factor0.95190.86250.78150.70810.6416-
    Present valueUSD 7.6bnUSD 7.2bnUSD 6.8bnUSD 6.4bnUSD 6.0bn-5.6%
    Present Value Of The ForecastUSD 34.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.062Reported 1.092, pulled toward 1.0 (Blume)
    Cost of equity10.84%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 110.9bn93.1% of capital
    Total debtUSD 8.2bn6.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.36%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 191.42

    71% of EV

    Forecast FCFF, final year
    USD 9.4bn
    Capex at depreciation, working capital in reinvestment
    USD 11.0bn
    Less reinvestment at g/ROIC (8.7% of NOPAT)
    USD -958.5m
    Capitalised
    USD 10.0bn
    ROIC (reported)
    28.6%
    Terminal value, undiscounted
    USD 130.5bn
    Terminal value, discounted
    USD 83.7bn
    Enterprise value
    USD 117.8bn
    Less net debt
    USD -3.3bn
    Equity value
    USD 121.1bn

    Exit at 8.8x EBITDA

    Value per shareUSD 190.25

    71% of EV

    Terminal value, undiscounted
    USD 129.3bn
    Terminal value, discounted
    USD 83.0bn
    Enterprise value
    USD 117.0bn
    Less net debt
    USD -3.3bn
    Equity value
    USD 120.3bn

    Spread between methods: 1%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.36%230.78241.60254.22269.17287.14
    9.36%202.03209.60218.24228.21239.84
    10.36%179.80185.27191.42198.38206.33
    11.36%162.10166.17170.67175.70181.34
    12.36%147.67150.76154.15157.87162.00

    Outlined: this model. Green text: above today's price of 181.29. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year4.2%2.4%-1.8pp
    EBIT margin15.4%14.6%-0.8pp
    Discount rate10.4%10.8%+0.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.