Accenture’s ACN shares are having a tough time of late and are down in double digits (% wise) over the past three months. This significant decline in the ACN stock (29.3% to be exact) has resulted in it performing worse than the Zacks Computers – IT Services industry’s 7.9% decline. ACN’s shares are also lagging those of fellow Computers IT Services players like Vertiv Holdings VRT and Serve Robotics SERV.
While Serve Robotics’ shares have declined roughly 23%, those of Vertiv Holdings have performed well, gaining in double digits (13.3%) over the past three months.
3-Month Price Comparison
Revenue Growth Outlook Hurts ACN Stock
The chief contributor to the stock’s recent disappointing performance on the bourse is the revenue growth outlook provided by management when it released the third-quarter fiscal 2026 (ended May 31, 2026) results last month.
The consulting and technology services company lowered the upper end of its fiscal 2026 revenue growth outlook, overshadowing the fact that the third-quarter earnings per share topped the Zacks Consensus Estimate.
The company now expects fiscal 2026 revenue growth of 3% to 4% in local currency, down from its previous forecast of 3% to 5%. The disappointing outlook, coupled with the fact that revenues lagged expectations in the fiscal third quarter, naturally disappointed investors.
AI Disruption Concerns: A Major Headwind for ACN
Artificial Intelligence or AI-related disruptions were reflected in the company’s fiscal third-quarter results, causing a 2% in U.S. dollars (3% in local currency) year-over-year drop in new bookings. The below-par quarterly sales and soft bookings further give rise to concerns that AI is disrupting demand across consulting and managed services.
Fears that AI may render the services offered by firms like Accenture have been huge concerns. The double-digit decline highlighted above is mainly due to the skepticism about the impact of artificial intelligence on its business.
Although Accenture has invested heavily in artificial intelligence, many businesses are still unsure about how much value AI can deliver. Instead of rushing into large AI projects, companies are taking more time to evaluate the potential benefits, improve their data systems and manage costs in an uncertain economic environment.
As a result, many clients are starting with small AI pilot programs rather than committing to larger transformation projects. Moreover, many companies are spending mainly on essential AI and cybersecurity projects while cutting back on other technology investments. This is reducing demand for Accenture's broader consulting and IT services, weighing on its revenue growth and putting pressure on the stock.
This cautious approach is slowing the pace of new business for Accenture. This makes it harder for the company to quickly turn a strong interest in AI into higher revenues.
Geopolitical Uncertainty Represents Another Challenge
Even with the interim agreement between the United States and Iran, economic turbulence remains firmly in place. Hopes of a final deal continue to be shrouded in uncertainty.
At Accenture, revenues were impacted to the tune of roughly $100 million in the fiscal third quarter due to the Middle East conflict. Similar headwind is expected in the fiscal fourth quarter as well. Macroeconomic pressures have resulted in many key outsourcing contracts being delayed, thereby highlighting the growth concerns at Accenture.
How Is the Zacks Consensus Estimate for Earnings Faring?
Due to the headwinds mentioned above, the Zacks Consensus Estimate for fourth-quarter fiscal 2026, first-quarter fiscal 2027, full-year fiscal 2026 and 2027 has moved south over the past 60 days.
ACN: Valuation Looks Appealing
Accenture is currently trading at a significant discount, with a forward 12-month Price/Sales (P/S) of 1.2X compared with its industry’s 11.53X. It also appears to be highly undervalued compared with fellow industry players Serve Robotics and Vertiv Holdings. Accenture has a Value Score of A.
ACN Stock Looks Cheap
How to Approach ACN Stock?
Accenture’s top-line weakness and dim outlook, macroeconomic woes and AI-related concerns make the investment case risky. Concerns that generative AI may reduce the need for traditional IT consulting and outsourcing, leading to fewer projects for Accenture, in turn slowing its growth, have put pressure on the stock price
In view of the above, it appears prudent for investors to avoid Accenture for now rather than buy or hold the stock solely owing to the promising valuation picture. The company carries a Zacks Rank #4 (Sell) currently.
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Accenture PLC (ACN): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).