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Parsons (PSN)
NYSE:PSN
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Parsons
(NYSE:PSN)
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Rating:67Neutral
Price Target:
$90.00
▲(32.02% 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
Strong Revenue Growth
Parsons' significant revenue growth in Critical Infrastructure reflects its ability to capitalize on market demand and expand its footprint, supporting long-term business sustainability.
Significant Contract Wins
Securing large contracts enhances Parsons' market position and revenue visibility, providing a stable foundation for future growth and competitive advantage.
Improved EBITDA Margins
Margin expansion through improved program performance and acquisitions indicates operational efficiency, which is crucial for long-term profitability.
Negative Factors
Cash Flow Management Issues
Declining free cash flow poses liquidity risks and may limit Parsons' ability to invest in growth opportunities, affecting long-term financial health.
Federal Solutions Revenue Challenges
Significant revenue decline in Federal Solutions due to contract issues could impact Parsons' overall revenue growth and market position in this segment.
Impact of Government Shutdown
Government shutdowns can disrupt operations and delay project timelines, affecting Parsons' ability to execute contracts and generate revenue.
Parsons (PSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.65B
Dividend YieldN/A
Average Volume (3M)1.76M
Price to Earnings (P/E)19.4
Beta (1Y)0.72
Revenue Growth-0.24%
EPS Growth389.03%
CountryUS
Employees20,000
SectorTechnology
Sector Strength88
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.86
Shares Outstanding106,488,580
10 Day Avg. Volume851,434
30 Day Avg. Volume1,757,501
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)4.06
Price to Sales (P/S)1.45
P/FCF Ratio20.67
Enterprise Value/Market Cap0.00
Enterprise Value/Revenue0.00
Enterprise Value/Gross Profit0.00
Enterprise Value/Ebitda0.00
Forecast
1Y Price Target
$84.00Price Target Upside23.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 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 Earnings Call Summary
Earnings Call Date:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2026
Earnings Call Sentiment Neutral
The earnings call reflects a robust performance in Critical Infrastructure with significant revenue growth and major contract wins. However, challenges in Federal Solutions due to reduced revenue from a confidential contract and the impact of the government shutdown on federal operations present headwinds. Despite these challenges, Parsons maintains a strong pipeline and backlog, supporting a positive outlook.Q3-2025 Updates
Positive Updates
Strong Revenue Growth in Critical Infrastructure
Critical Infrastructure revenue increased by 18% from the third quarter of 2024, driven by organic growth of 13% and inorganic contributions from acquisitions.
Significant Contract Wins
Parsons won 4 contracts over $100 million in Q3, including new work for the Holston Army ammunition plant and a 6-year, $133 million contract for the Georgia State Route 400 Express Lanes.
Improved EBITDA Margins
Adjusted EBITDA margin expanded by 60 basis points to 9.8%, driven by improved program performance and accretive acquisitions.
Record Pipeline and Backlog
Parsons reported a $58 billion pipeline and a backlog of nearly $9 billion, with 72% funded. The company also has $11 billion in contract wins not yet booked.
Successful Acquisitions
Completed another accretive acquisition in the fast-growing water market, enhancing capabilities and presence in Florida.
Negative Updates
Reduced Revenue from Confidential Contract
Total revenue, including the confidential contract, decreased 10% from the prior year, and was down 14% on an organic basis.
Federal Solutions Revenue Challenges
Total Federal Solutions revenue, including the confidential contract, decreased 29% from the prior year period, impacted by lower volume on the fixed-price confidential contract.
Impact of Government Shutdown
Federal customer capacity constraints and the extended government shutdown impacted the timing of sole-source task order awards and material procurements.
Company Guidance
During the third quarter 2025 earnings call, Parsons Corporation provided robust guidance, underscoring its strong financial performance and strategic positioning for future growth. The company achieved industry-leading organic revenue growth, with total and organic revenue growth rates, excluding a confidential contract, at 14% and 9%, respectively. This includes 18% revenue growth in critical infrastructure and 9% in Federal Solutions. Parsons reported a 60 basis point increase in adjusted EBITDA margin to 9.8% and generated $163 million in cash flow from operations. The book-to-bill ratio stood at 1.0x for both the quarter and trailing 12 months, continuing a consistent trend since their 2019 IPO. Parsons reiterated its 2025 adjusted EBITDA and cash flow guidance at the midpoint, while modifying revenue outlook due to delays in federal customer capacity, sole-source task order awards, and material procurements. Significant contract wins in the quarter included four contracts over $100 million, enhancing the company's presence in strategic markets like national security infrastructure and water management.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
Negative
68.17
Price Trends
74.23
Negative
77.83
Negative
73.42
Negative
Market Momentum
-2.29
Negative
52.18
Neutral
81.45
Negative
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 68.17 is above the 20-day moving average (MA) of 63.36, below the 50-day MA of 74.23, and below the 200-day MA of 73.42, indicating a neutral trend. The MACD of -2.29 indicates Negative momentum. The RSI at 52.18 is Neutral, neither overbought nor oversold. The STOCH value of 81.45 is Negative, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $10.51B | 29.02 | 24.96% | 1.28% | 2.37% | -6.93% | |
77 Outperform | $10.37B | 44.25 | 12.76% | ― | 12.60% | 24.02% | |
77 Outperform | $9.39B | 29.55 | 17.81% | 0.70% | 4.18% | 16.05% | |
69 Neutral | $9.99B | 39.90 | 3.89% | 0.97% | -4.99% | 22.16% | |
67 Neutral | $3.65B | 19.41 | 15.89% | ― | -0.24% | 389.03% | |
63 Neutral | $7.75B | -36.01 | -6.20% | ― | 0.27% | -159.24% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
PSN
Parsons
68.17
-24.37
-26.33%
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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.