As the Q4 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the it services & consulting industry, including Accenture (NYSE:ACN) and its peers.
IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.
The 8 it services & consulting stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Accenture (NYSE:ACN)
With a workforce of approximately 774,000 people serving clients in more than 120 countries, Accenture (NYSE:ACN) is a professional services firm that helps organizations transform their businesses through consulting, technology, operations, and digital services.
Accenture reported revenues of $17.69 billion, up 9% year on year. This print exceeded analysts’ expectations by 3.2%. Overall, it was a very strong quarter for the company with a decent beat of analysts’ EPS estimates.
Accenture achieved the biggest analyst estimates beat of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 9.9% since reporting and currently trades at $312.90.
Is now the time to buy Accenture? Access our full analysis of the earnings results here, it’s free.
Best Q4: Grid Dynamics (NASDAQ:GDYN)
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Grid Dynamics reported revenues of $100.4 million, up 25.8% year on year, outperforming analysts’ expectations by 2%. The business had a very strong quarter with a solid beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.
Grid Dynamics pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The market seems unhappy with the results as the stock is down 18.7% since reporting. It currently trades at $11.45.
Is now the time to buy Grid Dynamics? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: ASGN (NYSE:ASGN)
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
ASGN reported revenues of $968.3 million, down 7.7% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted a miss of analysts’ EPS estimates.
ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 11.3% since the results and currently trades at $51.89.
Read our full analysis of ASGN’s results here.
EPAM (NYSE:EPAM)
Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE:EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.
EPAM reported revenues of $1.30 billion, up 11.7% year on year. This number surpassed analysts’ expectations by 1.6%. It was a very strong quarter as it also put up an impressive beat of analysts’ constant currency revenue estimates.
The stock is up 8.2% since reporting and currently trades at $172.58.
Read our full, actionable report on EPAM here, it’s free.
IBM (NYSE:IBM)
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE:IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
IBM reported revenues of $14.54 billion, flat year on year. This print topped analysts’ expectations by 1%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ operating income estimates and a solid beat of analysts’ EPS estimates.
The stock is up 14.2% since reporting and currently trades at $280.
Read our full, actionable report on IBM here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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