2007 is just drawing to a close for most of us, but international consultant and long-term Motley Fool Inside Value recommendation Accenture (NYSE:ACN) is already well on its way into 2008 -- fiscal 2008, that is. The new year's first quarterly earnings are due out tomorrow afternoon.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts follow Accenture, giving the stock 16 buy ratings and five holds.
  • Revenues. On average, they're looking for 15% revenue growth tomorrow, to $5.5 billion.
  • Earnings. Profits are predicted to climb 22% to $0.56 per share.

What management says:
Wrapping up last fiscal year in September, CEO William Green pronounced himself "delighted" with Accenture achieving its "highest-ever annual revenues, bookings, operating income and earnings per share." And the good times should keep on rolling. Green described demand for Accenture's services as "robust" and showing "continued momentum." He predicted that the firm would grow its revenues 9% to 12% (netting out currency exchange fluctuations, earn between $2.21 and $2.26 per share, and generate from $2 billion to $2.2 billion in free cash flow in fiscal 2008).

What management does:
Accenture has performed admirably on the revenue front the last couple of quarters, with its H2 2007 take exceeding that of H2 2006 by 21%, but margins on those revenues have slipped. Judging from the analyst estimates shown above, Wall Street believes that trend reversed in the new fiscal year, with revenue growth slowing, but margin improvement picking up the slack. If proven correct, this will extend Accenture's lead over BearingPoint (NYSE:BE) and EDS (NYSE:EDS), and bring the company closer to IBM (NYSE:IBM) and to the highly profitable Infosys (NASDAQ:INFY) -- in terms of operating profitability, at least.

Margins

5/06

8/06

11/06

2/07

5/06

8/06

Gross

27.2%

27.4%

27.1%

28.9%

28.6%

28.2%

Operating

9.9%

9.8%

10.0%

11.9%

11.7%

11.7%

Net

4.7%

5.3%

5.5%

6.5%

6.3%

5.8%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Inside Value 's recommendation of Accenture, made way back in July 2005, is currently outperforming the S&P 500 by 28 percentage points. While we can't promise another 28 points' worth of outperformance over the next 30 months, the team thinks prospects are good. According to Inside Value analyst Michael Olsen:

Human capital businesses [such as Accenture] have the ability to spread costs across an ever-growing revenue base. Accenture has done just that.... We're also quite impressed by Accenture's commitment to shareholders. It continues to return capital via repurchases and a 20% dividend increase. While the possibility of a sputtering economy could dent near-term results, we're confident in the company's long-term prospects.

So to sum up, you've got Wall Street's best and brightest predicting good news in the short term, and the Fool's own analysts saying we'll see more of the same over the long run. Combine that with an attractive valuation of nine times trailing free cash flow, and I have to say that Accenture is looking pretty good as an investment right now. Let's see whether tomorrow's news changes my opinion.

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