Parsons (PSN) AI Stock Analysis

• Market Cap: $7.28B
• Dividend Yield: N/A
• Average Volume (3M): 949.52K
• Price to Earnings (P/E): 19.5
• Beta (1Y): 0.73
• Revenue Growth: -0.24%
• EPS Growth: 389.03%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 88
• Industry: Industrial - Machinery
• EPS (TTM): 0.86
• Shares Outstanding: 106,488,580
• 10 Day Avg. Volume: 890,285
• 30 Day Avg. Volume: 949,517
• PEG Ratio: 1.00
• Price to Book (P/B): 4.06
• Price to Sales (P/S): 1.45
• P/FCF Ratio: 20.67
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 1.27
• Enterprise Value/Gross Profit: 5.78
• Enterprise Value/Ebitda: 11.31
• 1Y Price Target: $85.00
• Price Target Upside: 24.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $76.00 ▲(11.21% Upside)

Parsons' overall score is driven by strong earnings call performance and operational efficiency, offset by challenges in cash flow management and valuation concerns. The company's strategic positioning and contract wins support a positive outlook, but revenue growth and cash flow issues need to be addressed.

Positive Factors

Backlog & Pipeline

A $9B backlog and $58B pipeline with 72% funding provide multi-year revenue visibility and lower sales risk. Funded backlog supports stable resource planning and margin predictability, enabling execution and revenue recognition over coming years independent of short-term market moves.

Long-term Government Contracts

Long-term win and decades-long FAA relationship demonstrate deep government integration and program-level trust. Multi-year, mission-critical contracts underpin recurring revenue, strengthen competitive positioning in national infrastructure modernization, and reduce customer churn risk.

Margin Expansion

Improving EBITDA and gross margins reflect better program execution and accretive acquisitions, enhancing operating leverage. Sustained margin expansion improves cash generation and competitive pricing flexibility, assuming execution quality and disciplined M&A continue.

Negative Factors

Negative Revenue Trend

A negative top-line trend signals difficulty scaling organic sales across segments; prolonged revenue decline can erode fixed-cost absorption, impair margin gains, and force reliance on acquisitions to maintain growth, increasing execution and integration risk over the medium term.

Weakened Cash Generation

A sharp FCF decline and weak cash conversion reduce financial flexibility to fund working capital, bids, or M&A without raising more debt or equity. With only moderate leverage capacity, sustained FCF weakness could constrain strategic investment and stress liquidity during prolonged contract timing issues.

Federal Solutions Volatility

Heavy exposure to fixed-price federal contracts and a material confidential award created sharp revenue swings. Dependence on single-source task orders and sensitivity to government shutdowns or capacity constraints raises execution and margin risk, increasing earnings volatility in coming quarters.

Parsons Business Overview & Revenue Model

Company Description

Parsons Corporation provides integrated solutions and services in the defense, intelligence, and critical infrastructure markets in North America, the Middle East, and internationally. It operates through two segments, Federal Solutions and Critical Infrastructure. The company offers cyber security and intelligence services, as well as offensive and defensive cybersecurity platforms, tools, and operations to the U.S. Department of Defense and the United States intelligence community; space and geospatial solutions, such as geospatial intelligence, threat analytics, space situational awareness, small satellite launch and integration, satellite ground systems, fight dynamics, and command, and control solutions to the National Geospatial-Intelligence Agency, National Reconnaissance Office, and multiple units within the U.S. Department of Defense. It also provides missile defense and C5ISR solutions, such as integrated air and missile defense, data fusion and analytics, platform system integration, directed energy, joint all-domain operations, and command and control systems to Defense Intelligence Agency and the U.S. Department of Defense; technology services for energy production systems, aviation, healthcare and bio-surveillance systems, and environmental systems and associated infrastructure, as well as nuclear waste processing and treatment, weapons of mass destruction elimination, program and project management, infectious disease control analytics, and data protection solutions. In addition, the company offers intelligent transportation system management, aviation, rail and transit systems, smart cities software, and critical infrastructure cyber protection to the transportation authorities, rail, and transit entities; engineering services for infrastructure; and program management, and environmental solutions to private-sector industrial clients and public utilities. Parsons Corporation was founded in 1944 and is headquartered in Centreville, Virginia.

How the Company Makes Money

Parsons generates revenue through a combination of government contracts, private sector projects, and technology solutions. The company’s primary revenue streams include contract-based work for defense and intelligence agencies, infrastructure projects for municipal and federal governments, and cybersecurity services for commercial clients. Significant partnerships with government organizations and other private entities enhance its service offerings and create additional revenue opportunities. Moreover, the company invests in innovative technologies that increase its competitiveness in secure and infrastructure-related projects, contributing to its earnings.

Parsons Financial Statement Overview

Summary

Parsons shows strong operational efficiency and return on equity but faces challenges in revenue growth and cash flow management. The company's leverage is moderate, and while profitability margins have improved, the decline in free cash flow growth poses a risk.

Income Statement

Parsons demonstrates a solid gross profit margin of 21.4% TTM, indicating efficient cost management. However, the net profit margin of 5.9% TTM shows room for improvement in profitability. Revenue growth has been negative at -2.8% TTM, reflecting challenges in expanding sales. The EBIT and EBITDA margins have improved to 9.4% and 11.0% TTM, respectively, suggesting better operational efficiency.

Balance Sheet

The debt-to-equity ratio of 0.59 TTM indicates a moderate level of leverage, which is manageable but could pose risks if increased. Return on equity has improved to 16.3% TTM, showcasing effective use of equity to generate profits. The equity ratio of 44.6% TTM reflects a stable capital structure with a good proportion of assets financed by equity.

Cash Flow

Free cash flow has declined by 26.4% TTM, which is a concern for liquidity. The operating cash flow to net income ratio of 0.36 TTM suggests that cash generation from operations is lower than net income, indicating potential cash flow management issues. However, the free cash flow to net income ratio remains strong at 0.91 TTM, indicating that most of the net income is converted into free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.49B	6.75B	5.44B	4.20B	3.66B	3.92B
Gross Profit	1.43B	1.41B	1.21B	946.72M	852.82M	876.86M
EBITDA	731.00M	518.48M	415.52M	309.91M	274.49M	310.35M
Net Income	386.84M	235.05M	161.15M	96.66M	64.07M	98.54M
Balance Sheet
Total Assets	5.74B	5.49B	4.80B	4.20B	3.83B	3.94B
Cash, Cash Equivalents and Short-Term Investments	422.55M	453.55M	272.94M	262.54M	342.61M	483.61M
Total Debt	1.39B	1.42B	927.15M	916.41M	799.14M	828.33M
Total Liabilities	3.07B	2.95B	2.43B	2.10B	1.89B	2.08B
Stockholders Equity	2.56B	2.42B	2.29B	2.04B	1.90B	1.81B
Cash Flow
Free Cash Flow	382.83M	474.39M	367.30M	206.93M	184.47M	255.13M
Operating Cash Flow	437.63M	523.61M	407.70M	237.53M	205.57M	289.16M
Investing Cash Flow	-399.17M	-556.72M	-375.97M	-417.47M	-240.91M	-346.37M
Financing Cash Flow	-172.92M	218.75M	-21.87M	100.37M	-106.50M	348.23M

Parsons Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 68.34
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSN, the sentiment is Negative. The current price of 68.34 is below the 20-day moving average (MA) of 70.17, below the 50-day MA of 69.97, and below the 200-day MA of 74.21, indicating a bearish trend. The MACD of 0.30 indicates Positive momentum. The RSI at 44.78 is Neutral, neither overbought nor oversold. The STOCH value of 12.28 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSN.

Parsons Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCI	77 Outperform	$11.67B	31.57	24.96%	1.28%	2.37%	-6.93%
SPXC	77 Outperform	$10.60B	45.96	12.76%	―	12.60%	24.02%
WTS	77 Outperform	$10.19B	31.53	17.81%	0.70%	4.18%	16.05%
RRX	69 Neutral	$11.29B	44.00	3.89%	0.97%	-4.99%	22.16%
PSN	67 Neutral	$7.28B	19.45	15.89%	―	-0.24%	389.03%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
MIDD	60 Neutral	$7.55B	-34.90	-6.20%	―	0.27%	-159.24%