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Parsons (PSN)
NYSE:PSN

Parsons (PSN) AI Stock Analysis

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Parsons

(NYSE:PSN)

Rating:78Outperform
Price Target:
$78.00
▲(4.26%Upside)
Parsons' overall stock score is driven by strong financial performance and a positive earnings call sentiment. While technical indicators and recent corporate events present moderate risks, the company's strategic alignment and robust financial health support a favorable outlook.
Positive Factors
Domestic Infrastructure Growth
Domestically, CI programs such as the Newark Air Train and Georgia State Route are ramping up, indicating potential growth in domestic infrastructure projects.
Middle East Growth
CI provides some relief with rising sales in the Middle East, showing potential growth in this region.
Strategic Alignment
Parsons' alignment to U.S. and global spending priorities across global infrastructure mega projects, environmental services, and defense tech services is highlighted.
Negative Factors
Classified Contracts Uncertainty
The recent Department of State reorganization is expected to create additional uncertainty surrounding a classified contract for PSN.
Financial Outlook
The latest guidance revision lowered the 2025 sales by $700MM, affecting the company's financial outlook negatively.
Financial Performance
Q2 EPS is estimated to be below consensus, which may reflect challenges the company is facing in meeting financial expectations.

Parsons (PSN) vs. SPDR S&P 500 ETF (SPY)

Parsons Business Overview & Revenue Model

Company DescriptionParsons Corporation, listed under the ticker symbol PSN, is a technology-driven engineering and infrastructure firm. The company primarily operates in the defense, intelligence, security, and critical infrastructure sectors. Parsons provides innovative solutions in cybersecurity, missile defense, space, connected communities, and smart cities, leveraging its expertise in engineering, technical services, and software development to deliver integrated solutions for government and commercial clients worldwide.
How the Company Makes MoneyParsons Corporation generates revenue through a combination of government contracts and commercial projects. A significant portion of its income comes from long-term contracts with U.S. federal, state, and local government agencies, particularly in defense, intelligence, and infrastructure sectors. These contracts often span multiple years, providing a steady revenue stream. Additionally, Parsons engages in partnerships and collaborations with other corporations and technology firms to enhance its service offerings and expand its market reach. The company also invests in developing proprietary technologies and software solutions, further contributing to its revenue through licensing and implementation services across various industries.

Parsons Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 8.96%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong overall performance with record financial metrics, robust backlog, and strategic alignment with significant defense budgets. However, challenges include the impact of a paused confidential contract and increased SG&A expenses. Despite these challenges, the strong growth in critical infrastructure and alignment with federal priorities suggest a positive outlook.
Q1-2025 Updates
Positive Updates
Record First Quarter Results
Parsons achieved record first quarter results for total revenue, net income, earnings per share, adjusted EBITDA, and adjusted EBITDA margin.
Strong Backlog and Book-to-Bill Ratio
Total backlog and funded backlog are at all-time highs, with a book-to-bill ratio of 1.1 times, supported by 1.4 times in the Critical Infrastructure segment.
Critical Infrastructure Segment Growth
The segment saw a 14% revenue increase, driven by 8% organic growth and acquisitions, with adjusted EBITDA margin reaching 10.3%, a company record.
Federal Solutions Segment Alignment
The segment aligns with major budget areas, including a potential $1 trillion defense budget in fiscal year 2026, and saw 8% revenue growth excluding the confidential contract.
High Employee Retention
Achieved the best employee retention rates since 2020, which supports the company's ability to execute projects effectively.
Negative Updates
Confidential Contract Impact
The confidential federal contract is operating at a reduced volume due to a presidential executive order, affecting revenue growth.
Federal Solutions Margin Decline
Federal Solutions adjusted EBITDA margin decreased 120 basis points to 9%, primarily due to contract mix.
SG&A Expenses Increase
SG&A expenses increased 10% year-over-year, driven by recent acquisitions and were 15.7% of total revenue compared to 14.4% in the prior year period.
Company Guidance
During the first quarter of 2025, Parsons reiterated its guidance metrics, anticipating total revenue between $7.0 billion and $7.5 billion, reflecting a 7% growth at the midpoint and 5% organic growth. Excluding the confidential contract, the company projects total revenue growth of 18% and organic growth of 15%. Record financial results were achieved, with total revenue reaching $1.6 billion, a 1% increase year-over-year, and adjusted EBITDA margins at 9.6%. The company reported a book-to-bill ratio of 1.1 times and a total backlog of $9.1 billion, with a funded backlog at an all-time high of 69%. Additionally, Parsons highlighted a strong pipeline of $55 billion and over $12 billion in contract wins yet to be booked.

Parsons Financial Statement Overview

Summary
Parsons displays robust financial health with strong revenue and profit growth, effective cost management, and solid cash flow generation. The balance sheet is stable, although there is room for improving asset utilization. Overall, the company's financial metrics indicate a well-positioned status in its industry.
Income Statement
85
Very Positive
Parsons has demonstrated a strong income statement with robust revenue growth, particularly noticeable in the transition from 2023 to TTM 2025. The gross profit margin has notably increased, suggesting improved efficiency. Both EBIT and net profit margins show solid performance, indicative of effective cost management and operational efficiency. The TTM data reflects a net profit margin of 6.03%, highlighting profitability strength.
Balance Sheet
78
Positive
The company's balance sheet is stable with a moderate debt-to-equity ratio of 0.56 in TTM, indicating balanced leverage. The equity ratio stands at 45.05%, suggesting a strong equity base relative to total assets. Return on equity improved to 16.65% in TTM, reflecting efficient use of equity to generate profits, although there is room for improvement in asset management.
Cash Flow
82
Very Positive
Parsons shows strong cash flow generation, with a healthy operating cash flow to net income ratio of 1.41 in TTM, indicating solid cash conversion. Free cash flow has grown steadily, with a notable increase from 2024 to TTM, enhancing financial flexibility. The company maintains a strong free cash flow to net income ratio of 1.28, showcasing efficient cash management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.77B6.75B5.44B4.20B3.66B3.92B
Gross Profit1.44B1.41B1.21B946.72M852.82M876.86M
EBITDA745.71M518.48M415.52M309.91M274.49M310.35M
Net Income408.61M235.05M161.15M96.66M88.95M98.54M
Balance Sheet
Total Assets5.45B5.49B4.80B4.20B3.83B3.94B
Cash, Cash Equivalents and Short-Term Investments269.75M453.55M272.94M262.54M342.61M483.61M
Total Debt1.38B1.42B927.15M914.17M796.72M826.60M
Total Liabilities2.90B2.95B2.43B2.10B1.89B2.08B
Stockholders Equity2.45B2.42B2.29B2.04B1.90B1.81B
Cash Flow
Free Cash Flow521.99M474.39M367.30M206.93M184.47M255.13M
Operating Cash Flow575.24M523.61M407.70M237.53M205.57M289.16M
Investing Cash Flow-572.88M-556.72M-375.97M-417.47M-240.91M-346.37M
Financing Cash Flow-151.62M218.75M-21.87M100.37M-106.50M348.23M

Parsons Technical Analysis

Technical Analysis Sentiment
Positive
Last Price74.81
Price Trends
50DMA
67.58
Positive
100DMA
64.87
Positive
200DMA
81.48
Negative
Market Momentum
MACD
1.64
Negative
RSI
69.95
Neutral
STOCH
96.45
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSN, the sentiment is Positive. The current price of 74.81 is above the 20-day moving average (MA) of 69.84, above the 50-day MA of 67.58, and below the 200-day MA of 81.48, indicating a neutral trend. The MACD of 1.64 indicates Negative momentum. The RSI at 69.95 is Neutral, neither overbought nor oversold. The STOCH value of 96.45 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PSN.

Parsons Risk Analysis

Parsons disclosed 54 risk factors in its most recent earnings report. Parsons reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Parsons Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
PSPSN
78
Outperform
$8.00B20.2417.75%16.61%1279.09%
78
Outperform
$8.08B40.0015.24%10.78%30.05%
FLFLS
74
Outperform
$7.23B25.9314.00%1.52%4.23%20.40%
74
Outperform
$7.95B18.5712.33%-2.56%11.51%
RRRRX
72
Outperform
$10.06B43.223.69%0.92%-10.19%
67
Neutral
€7.72B16.617.50%1.95%7.14%-9.94%
64
Neutral
$9.00B26.5414.29%8.07%58.67%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PSN
Parsons
74.81
-3.88
-4.93%
FLS
Flowserve
55.29
9.23
20.04%
GNRC
Generac Holdings
152.37
10.18
7.16%
RRX
Regal Rexnord
151.70
17.04
12.65%
SPXC
SPX
173.03
29.19
20.29%
MIDD
The Middleby
148.63
28.78
24.01%

Parsons Corporate Events

Private Placements and Financing
Parsons Secures New $1.2 Billion Financing Package
Positive
Jun 5, 2025

Parsons has refinanced its existing term loan and revolving credit facility, originally maturing in October 2025 and June 2026, respectively. On June 5, 2025, the company secured a $450 million unsecured term loan and a $750 million unsecured revolving credit facility. These financial moves are aimed at enhancing the company’s liquidity for general working capital, capital expenditures, and other corporate purposes. The refinancing replaces previous agreements and provides Parsons with flexible borrowing options, potentially impacting its financial stability and operational capacity positively.

The most recent analyst rating on (PSN) stock is a Buy with a $70.00 price target. To see the full list of analyst forecasts on Parsons stock, see the PSN Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Parsons Adjusts 2025 Financial Guidance Amid Contract Changes
Negative
Jun 2, 2025

Parsons has announced adjustments to its 2025 financial guidance due to uncertainties stemming from a Department of State reorganization impacting a confidential contract. The company has removed the anticipated financial effects of this contract from its guidance for any period after June 2025, resulting in a reduction of its total revenue forecast and cash flow from operating activities, while maintaining a stable adjusted EBITDA margin.

The most recent analyst rating on (PSN) stock is a Buy with a $115.00 price target. To see the full list of analyst forecasts on Parsons stock, see the PSN Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 25, 2025