• If you are wondering whether Accenture at US$177.00 is starting to look like value after a tough stretch, this article walks you through the key numbers that matter.
• The stock has been almost flat over the past week, down around 0.8% over the last month, and has declined 31.9% year to date and 42.4% over the past year. This has changed how many investors may be thinking about its risk and return trade off.
• Recent coverage has focused on how global IT services and consulting demand, digital transformation projects, and enterprise technology spending trends could influence sentiment on Accenture, especially after such a sharp share price pullback. Investors are watching how these industry themes and contract pipelines might line up with the current stock price.
• Against that backdrop, Accenture currently scores a 6 out of 6 valuation score. The rest of this article will compare different valuation approaches before finishing with a way to assess value that goes beyond any single model.

Approach 1: Accenture Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash Accenture is expected to generate in the future, then discounts those projected cash flows back into today’s dollars to estimate what the business could be worth now.

Accenture’s latest twelve month free cash flow stands at about $12.46b. The 2 Stage Free Cash Flow to Equity model used here takes analyst forecasts for several years, then extends them further out. For example, Simply Wall St’s model includes a projection for 2030 free cash flow of $13.98b, with intermediate years between 2026 and 2035 also estimated and discounted back to today.

Bringing all those discounted cash flows together, the model arrives at an intrinsic value estimate of $338.46 per share. Against the current share price of $177.00, this implies the stock trades at about a 47.7% discount to the DCF estimate, which points to Accenture looking undervalued on this measure alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Accenture is undervalued by 47.7%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Approach 2: Accenture Price vs Earnings

For profitable companies, the P/E ratio is a useful way to think about value because it anchors the share price to the earnings that support it. The higher the growth investors expect and the lower the perceived risk, the higher the P/E ratio they are usually willing to pay, and vice versa.

Accenture currently trades on a P/E of 14.21x. That sits below the IT industry average P/E of 20.46x and slightly below the peer group average of 14.87x. On the surface, that suggests the stock is priced more cautiously than many sector peers.

Simply Wall St’s Fair Ratio for Accenture is 30.43x. This is its proprietary view of what a “normal” P/E could look like for this company given factors such as earnings growth, profit margins, industry, market cap and risk profile. This Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for company specific characteristics rather than assuming all IT stocks deserve similar multiples. Comparing the Fair Ratio of 30.43x with the current P/E of 14.21x points to the stock looking undervalued on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Accenture Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as a simple way for you to attach a clear story about Accenture to the numbers you care about, such as fair value, future revenue, earnings and margins. You can then compare that Fair Value to today’s price to decide whether you think the stock is expensive or cheap.

On Simply Wall St’s Community page, Narratives are available as easy, plug in tools that link what you believe about Accenture’s business to a financial forecast. This means you can say, for example, that one investor thinks a fair value closer to about US$210.00 makes sense based on more cautious assumptions, while another leans toward about US$330.00 based on stronger growth expectations. The platform will automatically keep that Fair Value updated when fresh news, earnings or other data points are added.

Do you think there's more to the story for Accenture? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.