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Parsons (PSN)
NYSE:PSN
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Parsons
(NYSE:PSN)
Rating:70Outperform
Price Target:
$81.00
▲(5.72% Upside)
Positive Factors
Strategic Contract Wins
Winning significant contracts enhances Parsons' revenue visibility and strengthens its market position, supporting long-term growth.
Strong Cash Flow Conversion
High cash flow conversion indicates efficient operations and financial health, enabling reinvestment and debt servicing.
New Financing Package
The new financing enhances liquidity and operational capacity, providing flexibility for growth and stability.
Negative Factors
Federal Solutions Revenue Decline
Declining revenue in Federal Solutions could impact overall growth and profitability if not addressed.
Rising SG&A Expenses
Increased SG&A expenses reduce profitability and may strain margins if not managed effectively.
Negative Free Cash Flow Growth
Declining free cash flow growth can limit reinvestment capacity and affect long-term financial flexibility.
Parsons (PSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.13B
Dividend YieldN/A
Average Volume (3M)1.01M
Price to Earnings (P/E)21.3
Beta (1Y)0.77
Revenue Growth9.22%
EPS Growth616.60%
CountryUS
Employees20,000
SectorTechnology
Sector Strength85
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.78
Shares Outstanding106,793,840
10 Day Avg. Volume1,050,099
30 Day Avg. Volume1,009,490
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.12
Enterprise Value/Revenue1.36
Enterprise Value/Gross Profit6.34
Enterprise Value/Ebitda12.35
Forecast
1Y Price Target
$86.25Price Target Upside12.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Parsons Business Overview & Revenue Model
Company DescriptionParsons 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 MoneyParsons generates revenue through multiple streams, primarily from contracts with government entities, including the Department of Defense and various federal agencies. The company earns money by providing specialized consulting, engineering, and construction services, often through long-term contracts. Key revenue streams include project management, defense systems development, and cybersecurity services. Additionally, Parsons benefits from strategic partnerships with other firms in the defense and technology sectors, enhancing its capabilities and market reach, which further contributes to its earnings.
Parsons Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong performance in revenue growth, cash flow, and strategic contract wins, despite challenges in the Federal Solutions segment due to the confidential contract termination and increased SG&A expenses.Q2-2025 Updates
Positive Updates
Strong Revenue and EBITDA Growth
Excluding the confidential contract, total revenue grew 13% and 8% on an organic basis. Adjusted EBITDA margin expanded by 40 basis points to 9.4%, marking a second quarter record.
High Cash Flow and Book-to-Bill Ratio
$160 million of cash flow from operations was achieved, with a free cash flow conversion rate of 151%. Parsons reported a book-to-bill ratio of 1.0x for the quarter and trailing 12 months.
Significant Contract Wins
Parsons won three contracts over $100 million in Q2, including a $176 million contract with the U.S. Army Corps of Engineers and a $134 million contract for Giant Mine remediation in Canada.
Middle East and North America Growth
Middle East revenue expected to grow over 10% in 2025, marking the fourth consecutive year of double-digit growth. North America infrastructure revenue grew 17%.
Strategic Acquisition
Acquisition of Chesapeake Technology International enhances multi-domain technologies and strengthens relationships with key customers.
Negative Updates
Federal Solutions Revenue Decline
Second quarter Federal Solutions revenue decreased 19% from the prior year, largely due to the confidential contract termination.
SG&A Expenses Increase
SG&A expenses increased by 13% from the prior year, driven by acquisitions and investments in bid and proposal activity.
Federal Solutions Margin Pressure
Adjusted EBITDA margin for Federal Solutions decreased by 210 basis points to 8.3%, affected by contract mix and increased investments.
Company Guidance
During the second quarter 2025 earnings call, Parsons Corporation provided comprehensive guidance for the remainder of the year, including increased revenue, adjusted EBITDA, and cash flow projections. The company anticipates total revenue to range between $6.48 billion and $6.68 billion, reflecting a 17% growth, and 13% on an organic basis excluding a confidential contract. Adjusted EBITDA is expected to be between $595 million and $635 million, with a margin of 9.3% at the midpoint. Operating cash flow is projected to be between $400 million and $440 million, boosted by a cash tax benefit related to the reconciliation bill. Key metrics highlighted include a free cash flow conversion rate of 151% for the quarter, a trailing 12-month book-to-bill ratio of 1.0x or greater since their 2019 IPO, and a backlog of nearly $9 billion, of which 70% is funded. Parsons is also focusing on leveraging their $55 billion pipeline, which includes 114 opportunities worth $100 million or more.Parsons Financial Statement Overview
Summary
Parsons demonstrates strong profitability and operational efficiency with improving margins and return on equity. However, recent revenue decline and negative free cash flow growth pose challenges. The balance sheet remains robust with moderate leverage, supporting financial stability.Income Statement
Parsons has demonstrated strong profitability with a consistent gross profit margin around 21-23% and improving net profit margins, reaching 5.9% in the TTM. However, recent revenue growth has been negative, indicating potential challenges in maintaining sales momentum. The EBIT and EBITDA margins have shown improvement, reflecting operational efficiency gains.75
Positive
Balance Sheet
The company's debt-to-equity ratio is moderate at 0.59, indicating a balanced approach to leveraging. Return on equity has improved significantly to 16.3% in the TTM, showcasing effective use of equity capital. The equity ratio remains stable, suggesting a solid capital structure.70
Positive
Cash Flow
Operating cash flow has increased, but free cash flow growth has been negative recently, raising concerns about cash generation sustainability. The free cash flow to net income ratio is strong, indicating efficient cash conversion, although the decline in free cash flow growth warrants attention.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.68B | 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 | 735.47M | 518.48M | 415.52M | 309.91M | 274.49M | 310.35M |
| Net Income | 394.67M | 235.05M | 161.15M | 96.66M | 64.07M | 98.54M |
Balance Sheet | ||||||
| Total Assets | 5.72B | 5.49B | 4.80B | 4.20B | 3.83B | 3.94B |
| Cash, Cash Equivalents and Short-Term Investments | 411.33M | 453.55M | 272.94M | 262.54M | 342.61M | 483.61M |
| Total Debt | 1.47B | 1.42B | 927.15M | 914.17M | 796.72M | 826.60M |
| Total Liabilities | 3.10B | 2.95B | 2.43B | 2.10B | 1.89B | 2.08B |
| Stockholders Equity | 2.52B | 2.42B | 2.29B | 2.04B | 1.90B | 1.81B |
Cash Flow | ||||||
| Free Cash Flow | 520.39M | 474.39M | 367.30M | 206.93M | 184.47M | 255.13M |
| Operating Cash Flow | 573.81M | 523.61M | 407.70M | 237.53M | 205.57M | 289.16M |
| Investing Cash Flow | -632.38M | -556.72M | -375.97M | -417.47M | -240.91M | -346.37M |
| Financing Cash Flow | -57.43M | 218.75M | -21.87M | 100.37M | -106.50M | 348.23M |
Parsons Technical Analysis
Positive
76.62
Price Trends
76.76
Negative
72.06
Positive
74.58
Positive
Market Momentum
-0.38
Positive
48.38
Neutral
31.13
Neutral
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 76.62 is below the 20-day moving average (MA) of 77.99, below the 50-day MA of 76.76, and above the 200-day MA of 74.58, indicating a neutral trend. The MACD of -0.38 indicates Positive momentum. The RSI at 48.38 is Neutral, neither overbought nor oversold. The STOCH value of 31.13 is Neutral, 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $9.47B | 30.51 | 17.75% | 0.67% | 2.96% | 12.62% | |
78 Outperform | $9.51B | 26.76 | 24.94% | 1.40% | 2.92% | -9.78% | |
78 Outperform | $8.90B | 42.52 | 15.02% | ― | 8.90% | 29.18% | |
71 Outperform | $7.03B | 17.65 | 12.06% | ― | -1.70% | 10.24% | |
70 Outperform | $8.13B | 21.30 | 16.67% | ― | 9.22% | 616.60% | |
62 Neutral | $9.62B | 37.60 | 3.84% | 1.01% | -7.88% | ― | |
61 Neutral | $36.69B | 12.42 | -10.20% | 1.85% | 8.50% | -7.32% |
* Technology Sector Average
Performance Comparison
PSN
Parsons
76.62
-21.14
-21.62%
DCI
Donaldson Company
80.85
10.65
15.17%
RRX
Regal Rexnord
138.86
-15.44
-10.01%
SPXC
SPX
186.32
32.52
21.14%
MIDD
The Middleby
134.59
-1.17
-0.86%
WTS
Watts Water Technologies
281.44
87.86
45.39%
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.