ACN

Accenture is a high-quality, capital-light business being priced like a struggling one. Revenue has compounded from $50.5B (FY2021) to $69.7B (FY2025), never once declining, with net income rising every year from $5.91B to $7.68B and FY2025 diluted EPS of $12.15 (+6.2% YoY). Profitability is genuinely good for a services firm — 14.7% operating margin, 11.0% net margin, and a standout 24.6% return on equity. The balance sheet is fortress-grade: $11.5B cash (up 129% YoY), only $114M current debt (down 88%), $31.2B equity, and a 1.42 current ratio ($28.9B current assets vs $20.4B current liabilities). Operating cash flow of $11.5B (+25.7%) fully funds the $600M of capex, the $4.62B of buybacks and the dividend, so capital returns are self-funded rather than debt-fueled.

At $124.44 the stock trades at 10.2x FY2025 EPS and 1.1x sales — a valuation that implies stagnation or decay, not the mid-single-digit revenue and EPS growth actually being delivered. For a business earning 24.6% on equity with minimal leverage and near-100% cash conversion, a low-double-digit P/E is a mismatch between price and quality. The declining retained earnings (-8.9%) is not deterioration — it reflects returning more capital ($4.62B buybacks + dividends) than net income, which at this valuation is accretive to per-share value; the share count is already edging down (-0.5%).