ACN Accenture
Superb capital-light franchise, but AI clouds the hours-based model; price already assumes most plausible growth.
The business
Accenture sells IT consulting, systems integration, outsourcing (managed services) and digital/cloud/AI transformation work to large enterprises and governments worldwide. Revenue is mostly billable people-hours and multi-year managed-services contracts. It needs almost no capital, so most profit converts to free cash flow.
Quality gate · 89/100
Moat & management
| Moat | narrow moat |
| Source | switching costs |
| Trajectory | stable |
| Management | excellent |
Deep, embedded C-suite relationships, multi-year outsourcing contracts and global scale give it a trusted-brand and switching-cost advantage that few rivals match. Labor-based services still have limited pricing power, and generative AI threatens the hours-based model even as it creates new integration demand.
It returns nearly all FCF through steady dividends and buybacks and runs a net-cash balance sheet. It spends disciplined amounts on many tuck-in acquisitions; buybacks are programmatic rather than price-sensitive, but the share count still shrinks slowly.
Owner-earnings inputs
| Owner earnings (TTM) | 8.60B |
| Owner-earnings yield | 6.5% |
| Free-cash-flow yield | 9.6% |
| Growth used (normalized) | 5.5% |
| Market-implied growth (reverse DCF) | 3.9% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 10.1% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 8.94B | 5.5% | 8.12B |
| 2 | 9.42B | 5.3% | 7.76B |
| 3 | 9.90B | 5.1% | 7.41B |
| 4 | 10.39B | 5.0% | 7.06B |
| 5 | 10.89B | 4.8% | 6.72B |
| 6 | 11.39B | 4.6% | 6.38B |
| 7 | 11.90B | 4.4% | 6.05B |
| 8 | 12.40B | 4.2% | 5.72B |
| 9 | 12.91B | 4.1% | 5.41B |
| 10 | 13.41B | 3.9% | 5.10B |
| 11 | 13.91B | 3.7% | 4.80B |
| 12 | 14.40B | 3.5% | 4.51B |
| 13 | 14.88B | 3.4% | 4.24B |
| 14 | 15.35B | 3.2% | 3.97B |
| 15 | 15.82B | 3.0% | 3.71B |
Key risks
- Generative AI deflates billable-hour demand for coding, testing and BPO work faster than new AI work replaces it
- Federal and enterprise discretionary spending cuts slow consulting bookings
- Wage inflation and offshore pricing pressure from Indian IT firms compress margins
Catalysts
- Enterprise AI adoption needs large data, cloud and process re-engineering programs where Accenture leads
- Rebound in discretionary consulting spend and continued share-count reduction
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Net cash 3.3B credited to value (interest stripped from owner earnings to avoid double-counting). · Price pays for ~4%/yr owner-earnings growth over 15y (reverse DCF); model credits 6%.