Accenture plcACNNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $582.65 per share(market-calibrated)

+177.5%

Upside to Fair Value

Current

$210.00

Pure Model

$607.93

Fair Value

$582.65

Bull Case

$809.38

Bear Case

$443.67

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $607.93.

What's Driving This Ratingfor ACN

✓

CapEx already efficient

CapEx at 0.84% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 14.98% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $31.1B (21.72% margin).

→

Moderate revenue growth

Analyst consensus projects 6.12% revenue growth, fading to 3.75% by Year 10. Revenue reaches $143.3B (vs $69.7B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $441.90/share (17.8x terminal FCF) while exit multiple gives $773.95/share (37.9x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.84% indicates efficient cash generation. FCF reaches $25.7B by Year 10 (17.95% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.25

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.13%

Cost of Debt

Pre-tax Cost of Debt1.08%

Tax Rate23.74%

After-tax Cost of Debt0.82%

Equity Weight (E/V)94.13%

Debt Weight (D/V)5.87%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (94.13% × 10.13%) + (5.87% × 0.82%)

= 9.58%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$73.9B	$83.1B	$100.8B	$122.0B	$143.3B
EBIT	$11.1B	$12.5B	$15.1B	$22.7B	$31.1B
Tax	$2.6B	$3.0B	$3.6B	$5.4B	$7.4B
NOPAT	$8.4B	$9.5B	$11.5B	$17.3B	$23.7B
+ Depreciation	$1.9B	$2.2B	$2.6B	$3.2B	$3.7B
- Capex	$625M	$702M	$852M	$1.0B	$1.2B
- Δ NWC	$427M	$509M	$1.1B	$1.0B	$518M
Free Cash Flow	$9.3B	$10.4B	$12.2B	$18.4B	$25.7B
Discount Factor	0.913	0.760	0.633	0.527	0.400
Present Value	$8.5B	$7.9B	$7.7B	$9.7B	$10.3B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$25.7B

Terminal Growth Rate3.75%

WACC9.58%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$457.7B

PV of Terminal Value$183.3B

Exit Multiple Method

Year 10 EBITDA$34.8B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$975.8B

PV of Terminal Value$390.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$89.6B

PV of Terminal Value$183.3B

Enterprise Value$272.8B

(-) Net Debt-$3.3B

Equity Value$276.1B

Shares Outstanding625M

Price per Share$441.90

Exit Multiple Method

PV of Projected FCFs$89.6B

PV of Terminal Value$390.8B

Enterprise Value$480.3B

(-) Net Debt-$3.3B

Equity Value$483.6B

Shares Outstanding625M

Price per Share$773.95

Pure Model Fair Value

$607.93

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.58%	$751.58	$777.04	$809.14	$850.87	$907.33
8.58%	$658.33	$674.10	$693.13	$716.56	$746.09
9.58%	$585.26	$595.70	$607.93	$622.45	$639.97
10.58%	$525.61	$532.85	$541.16	$550.78	$562.05
11.58%	$475.55	$480.76	$486.64	$493.32	$500.99

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$443.67

111.3% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.56

Base Case

$607.93

189.5% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.25

Bull Case

$809.38

285.4% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.06

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth6.12%

Year 3 Revenue Growth6.52%

Year 5 Revenue Growth12.68%

Year 7 Revenue Growth9.11%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin14.98%

Terminal EBIT Margin25.00%

Tax Rate23.74%

Historical Capex / Rev0.84%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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