Parsons (PSN) AI Stock Analysis

Compare

509 Followers

Top Page

Parsons

(NYSE:PSN)

Rating:78Outperform

Price Target:

$76.00

▲( 14.86% Upside)

Parsons scores well due to its strong financial performance and positive earnings call, which highlight robust growth and strategic positioning. Technical analysis shows mixed signals, and while the valuation is fair, it is not especially compelling. The absence of notable corporate events keeps the focus on core financial and operational strengths.

Positive Factors

International Contracts

Parsons is positioned to secure numerous World Cup infrastructure contracts due to its leading role in U.S. transportation infrastructure.

Organic Growth

Management expects core business to deliver a 15% organic growth rate, indicating strong performance in areas outside the Confidential Program.

Negative Factors

Confidential Program Risk

The unwinding of the Confidential Program is expected to create a significant headwind in 2026, affecting revenue and growth targets.

Contract Review

There is a significant risk associated with a ~$725M annual revenue contract for a confidential humanitarian customer, which is under review.

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

Market Cap

$7.07B

Dividend YieldN/A

Average Volume (3M)1.45M

Price to Earnings (P/E)17.9

Beta (1Y)0.66

Revenue Growth16.61%

EPS Growth1279.09%

CountryUS

Employees20,000

SectorTechnology

Sector Strength76

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)0.78

Shares Outstanding106,874,985

10 Day Avg. Volume1,405,063

30 Day Avg. Volume1,445,927

Financial Highlights & Ratios

PEG Ratio0.08

Price to Book (P/B)2.64

Price to Sales (P/S)0.00

P/FCF Ratio12.48

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$77.43

Price Target Upside17.02% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

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 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 Financial Statement Overview

Summary

Parsons demonstrates strong financial health with robust revenue growth and improved profit margins. The balance sheet is stable with a moderate debt-to-equity ratio and strong equity base, while cash flow generation is solid, indicating effective cash management and financial flexibility.

Income Statement

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

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

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.77B	6.75B	5.44B	4.20B	3.66B	3.92B
	Gross Profit
1.44B	1.41B	1.21B	946.72M	852.82M	876.86M
	EBIT
435.45M	428.07M	288.36M	185.67M	132.45M	177.81M
	EBITDA
745.71M	518.48M	415.52M	309.91M	274.49M	310.35M
	Net Income Common Stockholders
408.61M	235.05M	161.15M	96.66M	88.95M	98.54M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
269.75M	453.55M	272.94M	262.54M	342.61M	483.61M
	Total Assets
5.45B	5.49B	4.80B	4.20B	3.83B	3.94B
	Total Debt
1.38B	1.42B	927.15M	914.17M	796.72M	826.60M
	Net Debt
1.11B	967.50M	654.21M	651.63M	454.11M	342.99M
	Total Liabilities
2.90B	2.95B	2.43B	2.10B	1.89B	2.08B
	Stockholders Equity
2.45B	2.42B	2.29B	2.04B	1.90B	1.81B
Cash Flow		Free Cash Flow
521.99M	474.39M	367.30M	206.93M	184.47M	255.13M
	Operating Cash Flow
575.24M	523.61M	407.70M	237.53M	205.57M	289.16M
	Investing Cash Flow
-572.88M	-556.72M	-375.97M	-417.47M	-240.91M	-346.37M
	Financing Cash Flow
-151.62M	218.75M	-21.87M	100.37M	-106.50M	348.23M

Parsons Technical Analysis

Technical Analysis Sentiment

Negative

Last Price66.17

Price Trends

50DMA

63.49

Positive

100DMA

69.85

Negative

200DMA

84.86

Negative

Market Momentum

MACD

1.02

Negative

RSI

51.82

Neutral

STOCH

49.68

Neutral

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 66.17 is above the 20-day moving average (MA) of 65.89, above the 50-day MA of 63.49, and below the 200-day MA of 84.86, indicating a neutral trend. The MACD of 1.02 indicates Negative momentum. The RSI at 51.82 is Neutral, neither overbought nor oversold. The STOCH value of 49.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
SPXC	80 Outperform	$7.00B	34.63	15.24%	―	10.78%	30.05%
PSN	78 Outperform	$7.07B	17.90	17.75%	―	16.61%	1279.09%
FLS	78 Outperform	$6.49B	23.26	14.00%	1.69%	4.23%	20.40%
MIDD	73 Outperform	$7.80B	18.21	12.33%	―	-2.56%	11.51%
RRX	68 Neutral	$8.91B	38.28	3.69%	1.04%	-10.19%	―
GNRC	67 Neutral	$7.30B	21.52	14.29%	―	8.07%	58.67%
Sector *	61 Neutral	$11.29B	10.07	-7.05%	2.96%	7.47%	-10.75%

* Technology Sector Average

Performance Comparison

PSN

Parsons

66.17

-11.20

-14.48%

FLS

Flowserve

49.61

1.21

2.50%

GNRC

Generac Holdings

123.55

-27.71

-18.32%

RRX

Regal Rexnord

134.38

-10.24

-7.08%

SPXC

SPX

149.77

7.78

5.48%

MIDD

The Middleby

145.79

22.70

18.44%

Parsons Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: -3.63%|

Next Earnings Date:Jul 30, 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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.