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Parsons (PSN)
NYSE:PSN
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Parsons
(NYSE:PSN)
67Neutral
Positive Factors
Contract Extensions
The Biden Administration issued a contract extension to PSN, which is important for the company's core mission.
Rebuild Initiatives
PSN is very likely to benefit from Ukraine/Russian peace and resulting rebuild initiatives.
Negative Factors
Execution Issues
Execution issues are a concern as PSN took additional charges on contracts, indicating ongoing challenges.
Growth Deceleration
The stock has shifted from a high growth, 'beat/raise' play to a decelerating growth story with 'miss/cut' risk.
Parsons (PSN) vs. S&P 500 (SPY)
Market Cap
$6.15B
Dividend YieldN/A
Average Volume (3M)1.84M
Price to Earnings (P/E)27.6
Beta (1Y)0.72
Revenue Growth24.03%
EPS Growth43.75%
CountryUS
Employees19,600
SectorTechnology
Sector Strength45
IndustrySoftware
Share Statistics
EPS (TTM)2.09
Shares Outstanding106,777,120
10 Day Avg. Volume1,712,083
30 Day Avg. Volume1,843,317
Financial Highlights & Ratios
PEG Ratio0.63
Price to Book (P/B)N/A
Price to Sales (P/S)0.93
Price to Cash Flow (P/CF)12.30
P/FCF Ratio13.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$81.14Price Target Upside40.92% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Parsons Business Overview & Revenue Model
Company DescriptionParsons Corp. provides engineering, design, planning, and construction management services. It offers solutions for commercial, federal, transportation, and water resources. The company delivers engineering, construction, systems and resource integration, project and program management, and environmental services to customers. Its projects include airports, bridges, chemical demilitarization, dams, energy generation facilities, environmental remediation and restoration, homeland defense, hospitals, missile defense, pharmaceutical plants, ports, public works, rail systems, roads, schools and universities, water distribution, and wastewater treatment systems. The company was founded by Ralph Monroe Parsons on June 12, 1944 and is headquartered in Pasadena, CA.
How the Company Makes MoneyParsons Corporation makes money primarily through government contracts and commercial contracts in its core markets of defense, intelligence, and critical infrastructure. The company's revenue streams are generated from providing engineering services, cybersecurity solutions, and project management services. Key sources of revenue include long-term contracts with the U.S. Department of Defense, federal civilian agencies, and state and local governments. Parsons also collaborates with commercial clients in industries such as transportation, energy, and environmental services. Strategic partnerships and acquisitions further enhance its capabilities and market reach, contributing to its financial performance.
Parsons Financial Statement Overview
Summary
Parsons exhibits solid financial performance with consistent revenue growth, profitability, and strong cash flow. However, the debt level is slightly above the industry average, and there is room for improvement in profit margins.Income Statement
Parsons demonstrated solid revenue growth over the last few years, with a noticeable increase from 2022 to 2023. The company achieved a healthy gross profit margin, maintaining profitability with consistent net profit margins despite competitive industry pressures. EBIT and EBITDA margins reflect operational efficiency, although there is room for improvement.78
Positive
Balance Sheet
The balance sheet shows robust equity growth and a consistent equity ratio, ensuring stability. The debt-to-equity ratio suggests manageable leverage, yet slightly higher than ideal for the industry. Return on equity remains positive, indicating effective utilization of equity to generate profits.72
Positive
Cash Flow
Parsons maintains strong operating cash flow, with significant free cash flow growth, particularly from 2022 to 2023. The operating cash flow to net income ratio indicates effective conversion of earnings into cash. Free cash flow to net income ratio highlights cash generation strength, supporting further investments and debt servicing.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.75B | 5.44B | 4.20B | 3.66B | 3.92B | Gross Profit |
| 1.41B | 1.21B | 946.72M | 852.82M | 876.86M | EBIT |
| 428.07M | 288.36M | 185.67M | 132.45M | 177.81M | EBITDA |
| 518.48M | 415.52M | 309.91M | 274.49M | 310.35M | Net Income Common Stockholders |
| 235.05M | 161.15M | 96.66M | 88.95M | 98.54M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 453.55M | 272.94M | 262.54M | 342.61M | 483.61M | Total Assets |
| 5.49B | 4.80B | 4.20B | 3.83B | 3.94B | Total Debt |
| 1.41B | 927.15M | 914.17M | 796.72M | 826.60M | Net Debt |
| 961.06M | 654.21M | 651.63M | 454.11M | 342.99M | Total Liabilities |
| 2.95B | 2.43B | 2.10B | 1.89B | 2.08B | Stockholders Equity |
| 2.42B | 2.29B | 2.04B | 1.90B | 1.81B |
| Cash Flow | Free Cash Flow | |||
| 523.61M | 367.30M | 206.93M | 184.47M | 255.13M | Operating Cash Flow |
| 523.61M | 407.70M | 237.53M | 205.57M | 289.16M | Investing Cash Flow |
| -556.72M | -375.97M | -417.47M | -240.91M | -346.37M | Financing Cash Flow |
| 218.75M | -21.87M | 100.37M | -106.50M | 348.23M |
Parsons Technical Analysis
Negative
57.58
Price Trends
76.95
Negative
89.23
Negative
88.86
Negative
Market Momentum
-5.73
Negative
28.46
Positive
46.99
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 57.58 is below the 20-day moving average (MA) of 62.02, below the 50-day MA of 76.95, and below the 200-day MA of 88.86, indicating a bearish trend. The MACD of -5.73 indicates Negative momentum. The RSI at 28.46 is Positive, neither overbought nor oversold. The STOCH value of 46.99 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 (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.23B | 17.21 | 13.79% | ― | 14.04% | 29.08% | |
75 Outperform | $13.94B | 16.79 | 75.34% | 1.89% | 14.07% | 116.33% | |
73 Outperform | $6.78B | 18.57 | 26.45% | 1.18% | 11.30% | ― | |
69 Neutral | $17.19B | 14.90 | 29.12% | 1.15% | 7.93% | 541.97% | |
68 Neutral | $5.19B | 18.81 | 17.62% | 1.39% | -3.87% | -37.31% | |
67 Neutral | $6.15B | 27.58 | 9.99% | ― | 24.03% | 43.75% | |
58 Neutral | $21.35B | 9.96 | -19.72% | 2.38% | 5.03% | -22.83% |
* Technology Sector Average
Performance Comparison
PSN
Parsons
57.41
-25.04
-30.37%
BAH
Booz Allen
111.55
-32.40
-22.51%
CACI
Caci International
370.02
-3.97
-1.06%
KBR
KBR
50.65
-10.04
-16.54%
SAIC
Science Applications
104.65
-37.19
-26.22%
LDOS
Leidos Holdings
133.60
6.89
5.44%
Parsons Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -21.66% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive overall sentiment with Parsons delivering record revenue, strong contract awards, and successful acquisitions. Despite challenges related to a confidential contract and procurement environment, the company's strong balance sheet, cash flow, and strategic alignment with market priorities suggest a positive outlook.Highlights
Record Financial Performance
Parsons achieved record results for total revenue, adjusted EBITDA, and contract awards for both the fourth quarter and the fiscal year 2024. Organic revenue growth was 22%, and adjusted EBITDA growth was 30% for the fiscal year.
Strong Contract Awards
Record contract awards increased to $1.7 billion in the fourth quarter, a 34% increase, with a full-year record of $7 billion, up 17% from 2023. Key wins included contracts in Saudi Arabia, Newark AirTrain, and cybersecurity, showcasing broad-based demand.
Successful Acquisitions
Parsons completed strategic acquisitions of BlackSignal and BCC Engineering, enhancing capabilities in federal solutions and critical infrastructure. The acquisitions have already realized revenue synergies.
Strong Balance Sheet and Cash Flow
Parsons ended the year with a strong balance sheet, achieving a free cash flow conversion rate of 116% of adjusted net income.
Lowlights
Challenges with Confidential Contract
A confidential program's related work has been paused, impacting Parsons' ability to complete the scope of their mission, leading to uncertainty about future revenue from this contract.
Critical Infrastructure Margin Impact
The adjusted EBITDA margin for Critical Infrastructure decreased due to $29 million in adjustments from legacy contracts and claim settlements.
Slower Procurement Environment
The procurement environment is experiencing slower award activity, attributed to capacity constraints and government spending shifts.
Company Guidance
During the fiscal year 2024 earnings call, Parsons reported record financial results and provided guidance for 2025. The company achieved a remarkable 22% organic revenue growth and a 30% increase in adjusted EBITDA, also expanding its adjusted EBITDA margin by 50 basis points. Total revenue exceeded $6.7 billion for the first time, with $7 billion in contract awards, a 17% increase from 2023. The Federal Solutions segment saw a 33% revenue increase, driven by organic growth and acquisitions, while Critical Infrastructure grew 13% organically. For 2025, Parsons expects revenue between $7.0 billion and $7.5 billion, reflecting approximately 7.5% growth at the midpoint. Adjusted EBITDA is projected between $640 million and $710 million, with a margin of 9.3% at the midpoint, indicating continued focus on margin expansion. They anticipate 5% organic growth, excluding lower volumes on a confidential contract, and plan to continue strategic acquisitions to sustain growth. The company's strong financial health, with a net debt leverage ratio of 1.3x, supports its investment in high-growth areas like artificial intelligence, cyber, and biometrics.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.