What happened
Accenture (ACN +0.20%) shares declined in early trading on Thursday, falling 3% by 10:30 a.m. ET compared to a flat result for the S&P 500. That drop wasn't enough to change a generally positive narrative for the consulting services stock, though, which is matching the market's 14% return so far in 2023.
Thursday's drop was sparked by a lukewarm reception for Accenture's latest earnings report and updated sales outlook.
So what
Accenture announced before the market opened that revenue had risen 5% for the selling period that ran through late May. That result marked a slowdown compared to the prior quarter, which featured 9%-higher sales. Yet profitability continued expanding modestly, with adjusted profit margin ticking up to 16.3% of sales from 16.1% a year ago.
In a press release, management highlighted Accenture's success at attracting huge contracts, which the company defines as bookings of over $100 million of spending per quarter. Accenture counted 26 such customers in the most recent period. "The strength of our strategy to be our clients' transformation partner of choice continues to resonate," CEO Julie Sweet told investors .
Yet investors were more interested in management's slightly reduced outlook for the fiscal 2023 year.
Now what
The company still sees profit margin landing at roughly 14.2% of sales, but the sales outlook is modestly weaker. Revenue growth will land between 8% and 9%, executives said, down from the prior forecast of between 9% and 10%.
Given its relatively strong bookings, profit margin, and customer engagement, this update is nothing that should shake investors' bullish thesis for this growth stock. Accenture is expecting slightly slower growth this year, but it is still expanding its business, boosting profitability, and attracting big new clients. The stock price might remain volatile, but the business is forging ahead at a stable rate.
