Accenture (NYSE:ACN) reported Q2 earnings last week, and the crowd went wild -- Accenture shares are up nearly 7% since.

It's not often you find investors getting this excited about a boring ol' consulting company. So, what was it, exactly, that had shareholders jumping out of their seats (and hitting the "Buy More" button)?

Let's take a quick look at the results and see if we can figure this out. In Q2, Accenture reported:

  • 5% improvement in revenue at $7.5 billion for the quarter.
  • Earnings up a similar 5%, at $1.08 per share.
  • Free cash flow essentially flat at $220 million.
  • Improved operating profit margin, up 30 basis points to 13.6%
  • And a whole lot more new business to apply that profit margin to, with $9.4 billion in new business brought in during the quarter.

It's that last number that seems most likely to have gotten investors excited. According to S&P Capital IQ, 13.6% operating profit margins is actually bit below par for Accenture. The company has only earned lower quarterly margins than that a couple of times in the last three years.

In contrast, Accenture ordinarily does somewhere in the low- to mid-$7 billions for quarterly revenue. The addition of $9.4 billion in new contracts promises to bump up that average quite a bit. It might be enough to exceed analysts' consensus earnings growth projection of 10% for Accenture over the next five years. It should certainly help Accenture to hit its own new target for revenue growth -- now set at 8% to 10% (in local currency), a big improvement over Accenture's prior projection of 5% to 8% revenue growth.

Projections... and a big problem
Looking forward, Accenture now projects that Q3 revenue will range from $7.35 billion to $7.6 billion, with full-year revenue growing as much as 10%. If achieved, that would suggest maximum revenues of $33 billion for Accenture this year.

But here's the problem: That 10% growth rate Accenture is positing is in local currency. Translated back into appreciating U.S. dollars, revenue growth (and profit growth) could be quite a bit low. To illustrate, Accenture says it grew local currency revenues 12% in Q2 -- but in dollar terms, growth was only 5%.

Management sees currency exchange rates subtracting 11% from growth in Q3, and 8% for the full year. As a result, Accenture has cut its earnings projection for the full year by more than a nickel, to a range between $4.61 and $4.71 per share.

At Accenture's current share price of $94 and change, that works out to a current-year P/E ratio of perhaps a little over 20. This seems rich for a company expected to grow earnings at 10%, and richer still given the problems Accenture faces with an appreciating dollar eating away at its profits.

Even with strong free cash flow to its credit ($3.9 billion in FCF, versus just $3 billion in "GAAP" profits), the stock looks overpriced to me at a price-to-free cash flow ratio of 15, and a 2.2% dividend payout. While not as pricey as a lot of other stocks I could name, Accenture is no bargain at today's prices.