Accenture Struggles Amid Rising Competition: What Wall Street's Saying

NEW YORK (TheStreet) -- Accenture (ACN) continues to struggle, as competitors such as Infosys (INFY) and others in the technology outsourcing business eat away at the company's strength, but Accenture said it hopes to turn around profitability as it works on its cost structure.

In the fiscal fourth quarter, the company earned $1.08 a share on $7.78 billion in net revenue as the company's tech outsourcing and management consulting businesses won contracts. But the company's operating expenses impacted earnings. Fiscal 2014 operating margins were 14.3%, allowing the company to generate $4.3 billion in operating income.

The company said it expects to improve operating margins for fiscal 2015 to hit between 14.4% and 14.6%. For the full fiscal year, the company expects to earn between $4.74 and $4.88 a share. Analysts surveyed by Thomson Reuters expect the company to earn $4.91 a share.

"Our growth strategy is clearly resonating with the needs of our clients, which are the world's leading companies," Pierre Nanterme, Accenture's chairman and CEO said in a statement. "We are investing to further strengthen our industry expertise as well as to differentiate our capabilities -- including in strategy, digital, technology, and operations. We have momentum in our business, and I am confident in our ability to continue driving sustainable, profitable growth and delivering value for our shareholders."

Shares of Accenture have struggled over the past year, gaining just 3.8% compared to a 16.9% gain in the S&P 500 (SPY) .

Following the report, analysts were slightly positive on the company and its future. Here's what a few of them had to say.

Jefferies analyst Jason Kupferberg (Hold, $82 price target)

"ACN's F4Q revs were ahead of Street, but this was outweighed by F15 guidance being below consensus. F4Q margins were soft due to headcount rebalancing/payroll efficiency efforts. However, these efforts, along with modestly improving pricing environment likely led to +10-30 bps y/y F15 op margin guidance. We maintain our Hold-rating, as valuation (15.9x C15 P/E) seems full in the context of ACN's growth profile."

J.P. Morgan analyst Tien-tsin Huang (Overweight)

"While not perfect, we found ACN's F4Q results and guidance to be quite solid, especially considering how complex and competitive the market has become. On the plus side, ACN reported solid F4Q revenue upside, issued typical 10-30bps of margin expansion guidance on in-line revenue and guided to better than feared FCF."

Credit Suisse analyst Charles Brennan (Outperform, $89 price target)

"Accenture has delivered FY14 results that show improving growth throughout the year. Looking forward, constant currency FY15 revenue guidance is OK, at 4-7% (we expected 4-8%) but as flagged in our preview details below revenues such as FX and tax means that the midpoint of FY15 EPS guidance is 2% below consensus. We downgrade our FY15 EPS by 3% to $4.77 and trim our target to $89 (from $92). We are lowering our FY14 and FY16 EPS estimates to $4.52 and $5.20 from $4.53 and $5.42 respectively."

--Written by Chris Ciaccia in New York

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