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Parsons
(NYSE:PSN)
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Rating:57Neutral
Price Target:
$45.00
▼(-23.38% Downside)
Action:Reiterated
Date:07/31/26
The score is primarily held back by weakening recent financial momentum (revenue and free-cash-flow decline) and a weak technical setup with the stock trading below all major moving averages. These negatives are partially offset by constructive earnings-call demand signals (strong bookings/backlog and improved normalized margins), but valuation remains somewhat demanding at a ~29 P/E given the reduced guidance.
Positive Factors
Strong bookings and funded backlog
Robust bookings and a funded $6.6B backlog provide multi-quarter revenue visibility and a steady pipeline for government and infrastructure work. A sustained book-to-bill >1.0x and 71% funding reduce near-term revenue volatility and support resource planning and contract conversion over the next several quarters.
Negative Factors
Recent revenue decline and lowered guidance
A multi-period revenue contraction and a material $300M guidance reduction indicate persistent timing, mix, and pass-through headwinds. Lowered revenue/EBITDA/OCF guidance implies constrained organic growth and slower margin leverage, making near-term recovery dependent on backlog conversion and federal funding cadence.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong bookings and funded backlog
Robust bookings and a funded $6.6B backlog provide multi-quarter revenue visibility and a steady pipeline for government and infrastructure work. A sustained book-to-bill >1.0x and 71% funding reduce near-term revenue volatility and support resource planning and contract conversion over the next several quarters.
Read all positive factors
Parsons (PSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.31B
Dividend YieldN/A
Average Volume (3M)1.03M
Price to Earnings (P/E)29.1
Beta (1Y)0.80
Revenue Growth-5.84%
EPS Growth-60.23%
CountryUS
Employees21,000
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)1.47
Shares Outstanding106,805,400
10 Day Avg. Volume878,451
30 Day Avg. Volume1,033,517
Financial Highlights & Ratios
PEG Ratio12.09
Price to Book (P/B)2.50
Price to Sales (P/S)1.04
P/FCF Ratio16.09
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$62.73Price Target Upside6.81% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)2.75
Revenue Forecast (FY)$6.47B
Parsons Business Overview & Revenue Model
Company Description
Parsons Corporation is a global provider of comprehensive solutions and services, primarily operating in the defense, intelligence, and critical infrastructure sectors. Its reach extends across North America, the Middle East, and other internation...
How the Company Makes Money
Parsons makes money mainly by delivering services and technology solutions under contracts for U.S. federal government customers and, to a lesser extent, critical infrastructure clients. Revenue is primarily generated through (1) Federal Solutions...
Parsons Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call conveyed strong underlying demand and operational momentum—marked by robust bookings (24% YoY), a solid backlog ($9.3B, 71% funded), margin expansion (normalized adjusted EBITDA margin 10.1%, Critical Infrastructure margin 11.9%) and sizable strategic contract wins and AI-enabled product traction. Offsetting these positives were meaningful one-time charges totaling $118M (a $77M remote contract loss and a $41M weather-related JV charge), a $300M reduction in revenue guidance (with adjusted EBITDA and operating cash flow lowered), federal timing/protest-driven delays, and some working capital pressure. Management characterized the charges as portfolio-shaping, strategic, and largely nonrecurring while reaffirming confidence in the core business and future growth; overall, the highlights and durable demand signals outweigh the transitory and one-time setbacks.Positive Updates
Strong Bookings and Book-to-Bill
Secured $1.9 billion in contract awards in Q2, a 24% year-over-year increase, driving an overall book-to-bill ratio of 1.2x for the quarter and 1.3x for the first half of 2026; Federal Solutions bookings were up 51% YoY with a 1.3x book-to-bill and Critical Infrastructure sustained a 1.1x book-to-bill (23rd consecutive quarter ≥1.0x).
Negative Updates
Significant Nonrecurring Charges Impacting EBITDA
Recorded $118 million of nonrecurring events in Q2 that impacted adjusted EBITDA: a $77 million loss related to two remote Federal Solutions contracts (held for sale) and a $41 million charge on a Critical Infrastructure joint venture project following an extraordinary weather event.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Bookings and Book-to-Bill
Secured $1.9 billion in contract awards in Q2, a 24% year-over-year increase, driving an overall book-to-bill ratio of 1.2x for the quarter and 1.3x for the first half of 2026; Federal Solutions bookings were up 51% YoY with a 1.3x book-to-bill and Critical Infrastructure sustained a 1.1x book-to-bill (23rd consecutive quarter ≥1.0x).
Read all positive updates
Company Guidance
Parsons updated FY‑2026 guidance to revenue of $6.2–6.5 billion, adjusted EBITDA of $500–560 million and operating cash flow of $430–490 million, reflecting a $300 million cut to revenue (about $85M from planned divestitures, ~$125M from a reduced infrastructure ramp including $50–60M of lower pass‑throughs, and ~$90M from federal timing/protest delays, with ~$20M of that protest‑related), and an adjusted EBITDA midpoint reduction of ~$115M to reflect $118M of nonrecurring items (including a $77M loss on two remote contracts and a $41M joint‑venture weather charge; a $19M gain from SETA divestiture benefits GAAP but not adjusted EBITDA). Management reiterated strong backlog and booking metrics underpinning the outlook: total backlog $9.3B (funded $6.6B, 71% funded), Q2 revenue $1.6B, Q2 bookings $1.9B (+24% YoY) and enterprise book‑to‑bill 1.2x (Federal Solutions bookings +51% with 1.3x; Critical Infrastructure 1.1x, Middle East 1.1x), Q2 normalized adjusted EBITDA margin ~10.1% (CI 11.9%, Federal 8.2%) and normalized Q2 adjusted EBITDA $161M; liquidity and cash metrics cited include net DSO 76 days, trailing‑12‑month free cash conversion 74% with a full‑year conversion target >100%, Q2 CapEx $16M and FY26 CapEx expected at ~1.5% of revenue.Parsons Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
70
Positive
Cash Flow
58
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.29B | 6.36B | 6.75B | 5.44B | 4.20B | 3.66B |
| Gross Profit | 1.35B | 1.43B | 1.41B | 1.21B | 946.72M | 852.82M |
| EBITDA | 394.64M | 550.30M | 518.48M | 415.52M | 309.91M | 274.49M |
| Net Income | 157.41M | 241.14M | 235.05M | 161.15M | 96.66M | 64.07M |
Balance Sheet | ||||||
| Total Assets | 6.11B | 5.77B | 5.49B | 4.80B | 4.20B | 3.83B |
| Cash, Cash Equivalents and Short-Term Investments | 266.04M | 466.39M | 453.55M | 272.94M | 262.54M | 342.61M |
| Total Debt | 1.63B | 1.48B | 1.42B | 927.15M | 916.41M | 799.14M |
| Total Liabilities | 3.36B | 3.00B | 2.95B | 2.43B | 2.10B | 1.89B |
| Stockholders Equity | 2.63B | 2.64B | 2.42B | 2.29B | 2.04B | 1.90B |
Cash Flow | ||||||
| Free Cash Flow | 308.14M | 410.41M | 474.39M | 367.30M | 206.93M | 184.47M |
| Operating Cash Flow | 384.25M | 478.38M | 523.61M | 407.70M | 237.53M | 205.57M |
| Investing Cash Flow | -476.51M | -254.00M | -556.72M | -375.97M | -417.47M | -240.91M |
| Financing Cash Flow | -52.73M | -215.68M | 218.75M | -21.87M | 100.37M | -106.50M |
Parsons Technical Analysis
Negative
58.73
Price Trends
55.10
Negative
54.29
Negative
63.58
Negative
Market Momentum
0.92
Negative
60.34
Neutral
73.59
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 58.73 is above the 20-day moving average (MA) of 55.41, above the 50-day MA of 55.10, and below the 200-day MA of 63.58, indicating a bearish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 60.34 is Neutral, neither overbought nor oversold. The STOCH value of 73.59 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 56 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | $11.22B | 31.68 | 18.38% | 0.63% | 14.22% | 25.22% | |
71 Outperform | $10.72B | 25.23 | 28.13% | 1.31% | 4.44% | 25.08% | |
69 Neutral | $9.39B | 38.40 | 12.67% | ― | 17.39% | 20.78% | |
68 Neutral | $12.49B | 46.97 | 4.23% | 0.66% | 1.54% | 22.59% | |
65 Neutral | $6.01B | -15.97 | -14.35% | ― | -4.89% | -179.82% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $4.31B | 29.12 | 6.01% | ― | -5.84% | -60.23% |
* Technology Sector Average
PSN
Parsons
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-41.44%
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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.