What happened?
Shares of business consultancy and services provider Accenture (ACN +2.10%) are trading up slightly in the wake of a very encouraging earnings report. The company reported its fiscal Q2 2016 results, which revealed it brought in revenue of just under $8 billion, and netted an adjusted profit of $905 million ($1.34 per diluted share). That top line figure was 6% higher on a year-over-year basis, while the per-share bottom line result was a whopping 24% improvement.
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Both line items were substantially above the average analyst estimates; these anticipated $7.7 billion in revenue, and adjusted EPS of $1.18.
The better-than-expected results should filter down to fiscal 2016's bottom line. Accenture raised its guidance for the full year -- it now believes it will post an adjusted EPS of $5.21 to $5.32. It previously forecast a range of $5.09 to $5.24.
Does it matter?
Accenture is a company in transition -- it wants to turn its business toward online and cloud services. Unlike many other enterprises in a similar situation, though, you'd never know it from the financials. The company continues to add to its considerable top line, netting out substantial profits while doing so. It says that its pivot toward higher-growth segments fueled the increases; going forward, this should help drive the anticipated higher profitability.
Being involved in lucrative projects also helps. Accenture is doing a lot of work for the government's once-janky HealthCare.gov website, which according to many has vastly improved since the early days of Obamacare. During the quarter, the company's health and public services segment saw a 12% year-over-year rise in sales.
Accenture's Q2 results should encourage investors that the company is on the right path with its transition, and more than holding its own while it gets there. We should keep in mind, however, that there is plenty of competition, particularly in Accenture's traditional wheelhouse of business consulting.
