Editor's note: Surprise! Accenture released its earnings two days ahead of schedule, just as this article was being put to bed last night. Now, obviously, we would have liked to get this out to you before the news broke. But although events have overtaken us, we hope you'll still find the following useful for deciphering yesterday's news.

Of course, if you'd like even more help understanding Accenture, feel free to drop by Fool.com again tomorrow, when Stephen Simpson will give you the full Foolish lowdown.

They say advice is the only free thing in life -- and even that isn't always free. Consulting firm and Motley Fool Inside Value pick Accenture (NYSE:ACN), for example, charges a pretty penny for its advice -- and its shareholders love it for doing so. Accenture reports its fiscal Q2 2006 numbers tomorrow after market-close.

What analysts say:

  • Buy, sell, or waffle? The 22 analysts who follow Accenture are a pretty optimistic bunch. Fully 17 of these learned souls rate Accenture a buy, and the other five prefer to hold.
  • Revenues. Wall Street will be looking for almost a 9% increase in quarterly revenue tomorrow, to $4.14 billion.
  • Earnings. Profits are expected to rise just a little more than 9%, to $0.35 per share.

What management says:
In Accenture's last earnings report, CEO William Green noted: "We grew revenues while keeping our costs in line, resulting in a 90-basis-point expansion of our operating margin on an options-adjusted basis. ... We continue to build momentum and are well positioned to meet our business and financial objectives for the full fiscal year." Pretty heady stuff.

What management does:
Now let's check whether the numbers back him up.

Margins %

8/04

11/04

2/05

5/05

8/05

11/05

Gross

30.5

30.2

29.8

29.6

29.8

29.6

Op.

11.8

11.7

11.5

11.4

11.8

11.8

Net

4.6

4.6

5

5.4

5.5

5.5
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Accenture's gross margins have actually eroded a bit over the past 18 months. But there's no arguing with Green's broader points. The company is indeed keeping its costs "in line." Though Accenture now expenses its stock options, operating margins are holding steady. Down on the net-margins line, there's a clear case of "building momentum" afoot. At last report, Accenture was 20% more profitable than it had been 18 months ago.

One Fool says:
Philip Durell, lead analyst for Inside Value, characterizes Accenture as "dominant ... in worldwide business consulting." Dominant companies should be able to expand their margins, setting the terms of payment with their clients and enjoying pricing power. In this regard, Accenture fits the bill. It's also attractive that Accenture generated more than twice as much free cash flow over the past year as its $959 million in GAAP net earnings.

Currently priced at 19 times trailing earnings, Accenture shares change hands for less than nine times trailing free cash flow. If that's not a value, I don't know what is.

Competitors:

  • BearingPoint (NYSE:BE)
  • EDS (NYSE:EDS)
  • IBM (NYSE:IBM)

Fool contributorRich Smithhas no interest, short or long, in any company named above.