Accenture Ltd. (ACN), which just announced a contract extension with The U.S. Department of Homeland Security, posted record earnings per share of 74 cents for the fiscal third quarter and record revenues of $6.10 billion. The earnings result surpassed the year-prior 54 cents and topped the consensus estimate by 7%, while revenues reflected year-over-year growth of 20%.

Company Description

Accenture is global management consulting, technology services and outsourcing company. The company collaborates with clients to help them become high-performance businesses and governments. With more than 180,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007.

The U.S. Department of Homeland Security’s Contract Extended

The company just announced a contract extension with The U.S. Department of Homeland Security. In accordance with the contract, Accenture acts as prime integrator for the United States Visitor and Immigrant Status Indicator Technology (US-VISIT) program. ACN noted that it was awarded the original contract in May 2004, which included a five-year base period plus five one-year options.

Record Growth in the Third Quarter

In late June, the Zacks Rank #1 (Strong Buy) company posted fiscal third-quarter results, which included record revenues that grew 20% on a year-over-year basis. Record earnings per share of 74 cents surpassed the year-prior 54 cents and topped the consensus estimate by 7%.

William D. Green, Accenture’s chairman & CEO, said, “Our excellent results in the third quarter include our highest-ever quarterly revenues and earnings per share. In addition, our disciplined approach to managing our diverse and global business enabled us to expand our operating margin, and the solid bookings we achieved demonstrate continued strong global demand for our services, even in markets experiencing difficult economic conditions.”

Upbeat on the Future

Accenture hiked its outlook for earnings per share for the full fiscal year 2008, to a range of $2.63 to $2.65 from its previously guided range of $2.55 to $2.60. Analysts have also been raising earnings forecasts for the year ending August 2008. Projections of $2.65 per share were increased from the two-months ago level of $2.59.

Favorable Industry Comparisons of Growth and Income

The company’s healthy return on equity (ROE) of 74% is well above the industry average of 9%. Its net margin of 6.5% tops the industry average of 3.5%. ACN’s dividend yield of 1% stands out in an industry that virtually pays no income.

Content Courtesy: Zacks Investment Research

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