This week S&P 500 giants Accenture and Nike are likely to report their quarterly results. Accenture (NYSE: ACN) and Nike’s (NYSE: NKE) results are expected to be released on June 24, according to the S&P 500 earnings calendar.
Let’s take a look to see what investors should expect from these upcoming quarterly results.
Accenture sales pegged at $12.77 billion
Accenture is one of the largest IT companies in the world valued at a market cap of $181 billion. It provides strategy, consulting, technology, outsourcing, and operations services serving companies across sectors including media, communications, banking, healthcare, retail, and consumer goods among others.
Accenture will release its fiscal third quarter of 2021 results on Thursday. Analysts tracking the stock expect it to post revenue of $12.77 billion in the quarter ended in May, indicating year-over-year growth of 17.5%. Comparatively, its adjusted earnings are forecast to rise by 18% to $2.24 in Q3.
ACN stock has crushed the S&P 500 in the past decade and is up 534% since June 2011. Comparatively, the S&P 500 is up 296% in this period. Accenture has a diversified revenue base and provides services to companies in close to 120 countries.
The company is now focused on expanding higher-growth strategic priorities including cloud, interactive, digital transformation, and security businesses in order to differentiate itself from peers such as IBM. It will also allow Accenture to widen its economic moat against challengers such as Globant. In 2020, around 70% of its sales were derived from these businesses compared to 65% in 2019 and 60% in 2018.
In the fiscal second quarter of 2021, Accenture reported a free cash flow of $2.44 billion, up from $1.37 billion in the year-ago quarter. This growth was impressive as Accenture spent over $1 billion in acquisitions in the first six months of fiscal 2021. It also spent over $3 billion on share buybacks and dividends in the last two quarters allowing it to maintain a forward yield of 1.23%.
In 2021, it has forecast an operating margin of around 15% which indicates a 30 basis points increase. Accenture spent just 28% of its free cash flows on dividends giving it enough room to increase payouts going forward.
NIKE is valued at a market cap of $207 billion
NIKE is a global retail giant that designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. It is expected to report fiscal fourth-quarter of 2021 results this week and is forecast to increase sales by 75% to $11.05 billion. Comparatively, its adjusted earnings might rise to $0.51 per share.
Analysts also expect NIKE to increase sales by 15.7% to $43.26 billion and earnings by 96% to $3.14 in fiscal 2021. These massive increases can be attributed to depressed sales in the year-ago quarter due to the ongoing pandemic.
In the fiscal third quarter, NIKE’s sales rose 3% year over year missing consensus estimates. This soft performance was due to a 10% decline in sales derived from North America that accounts for over 33% of total sales. According to NIKE domestic sales were impacted by industry-wide supply chain issues including container shortages and timing of wholesale shipments.
Nike’s bottom-line has been impacted in the past few quarters due to an increase in technology investments as well as a rise in product and operating expenses. These trends should be on the radar of long-term investors going forward. The online channel accounts for 35% of total sales and Nike is on its way to achieving its revenue goal of a 50% mix in this vertical.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
