Parsons Corporation is not just a player in the defense and infrastructure landscape; it is a transformative force that shapes the safety and efficiency of our daily lives. Renowned for its innovative solutions in cybersecurity, geospatial intelligence, and critical infrastructure, Parsons stands tall in the industrial machinery sector. With a strong commitment to quality and a reputation for excellence, I find myself questioning whether the current market valuation truly reflects the company’s robust fundamentals and growth potential.
Table of contents
Company Description
Parsons Corporation (NYSE: PSN), founded in 1944 and headquartered in Centreville, Virginia, operates primarily in the industrial machinery sector. The company provides integrated solutions in defense, intelligence, and critical infrastructure across North America and the Middle East. With approximately 20K employees, Parsons is a key player in areas such as cybersecurity, missile defense, and intelligent transportation systems. Their offerings span both hardware and software, focusing on innovative solutions for government and private sector clients. As a challenger in its industry, Parsons is well-positioned to shape the future of defense and infrastructure through advanced technologies and strategic partnerships.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of Parsons Corporation, focusing on its income statement, financial ratios, and dividend payout policy.
Income Statement
The following table summarizes the income statement for Parsons Corporation (PSN), highlighting key financial metrics over the past five fiscal years.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 3.92B | 3.66B | 4.20B | 5.44B | 6.75B |
| Cost of Revenue | 3.04B | 2.81B | 3.25B | 4.24B | 5.34B |
| Operating Expenses | 0.70B | 0.72B | 0.76B | 0.92B | 0.98B |
| Gross Profit | 0.88B | 0.85B | 0.95B | 1.21B | 1.41B |
| EBITDA | 0.31B | 0.27B | 0.31B | 0.42B | 0.52B |
| EBIT | 0.18B | 0.13B | 0.19B | 0.30B | 0.42B |
| Interest Expense | 0.02B | 0.02B | 0.02B | 0.03B | 0.05B |
| Net Income | 0.09B | 0.06B | 0.10B | 0.16B | 0.24B |
| EPS | 0.98 | 0.62 | 0.93 | 1.56 | 2.21 |
| Filing Date | 2021-02-24 | 2022-02-23 | 2023-02-17 | 2024-02-14 | 2025-02-19 |
Interpretation of Income Statement
Over the past five years, Parsons Corporation has exhibited a strong upward trajectory in both revenue and net income. Revenue increased from 3.92B in 2020 to 6.75B in 2024, showcasing an impressive growth trend. Net income also rose significantly, from 0.09B to 0.24B, indicating improved profitability. The gross profit margin remained stable, suggesting effective cost management despite rising operating expenses. In the most recent year, while revenue growth continued, the rate of increase in margins showed signs of stabilization, hinting at the potential for more efficient operations as the company scales. Overall, PSN’s financial performance appears robust, but vigilance regarding expense management is advisable in the face of ongoing growth.
Financial Ratios
Here is a summary of the financial ratios for Parsons Corporation over the available years.
| Metrics | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 2.51% | 1.75% | 2.30% | 2.96% | 3.48% |
| ROE | 5.43% | 3.37% | 4.73% | 7.05% | 9.73% |
| ROIC | 4.59% | 3.66% | 4.49% | 6.55% | 8.28% |
| P/E | 37.26 | 53.86 | 49.64 | 40.86 | 41.72 |
| P/B | 2.02 | 1.82 | 2.35 | 2.88 | 4.06 |
| Current Ratio | 1.55 | 1.58 | 1.55 | 1.52 | 1.29 |
| Quick Ratio | 1.55 | 1.58 | 1.55 | 1.52 | 1.29 |
| D/E | 0.46 | 0.42 | 0.45 | 0.41 | 0.59 |
| Debt-to-Assets | 20.99% | 20.80% | 21.78% | 19.30% | 25.89% |
| Interest Coverage | 8.49 | 7.48 | 8.01 | 9.16 | 8.30 |
| Asset Turnover | 0.99 | 0.96 | 1.00 | 1.13 | 1.23 |
| Fixed Asset Turnover | 11.82 | 12.76 | 16.70 | 21.08 | 25.51 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
Parsons Corporation (PSN) presents a mixed financial profile for the fiscal year ending December 31, 2024. The liquidity ratios indicate a current ratio of 1.29 and a quick ratio of 1.29, suggesting adequate short-term financial stability. However, the solvency ratio at 0.11 raises concerns about long-term debt management, especially with a debt-to-equity ratio of 0.59. Profitability remains moderate, with a net profit margin of 3.48%, indicating potential inefficiencies. The price-to-earnings ratio stands at 41.72, suggesting the stock may be overvalued compared to earnings. Overall, while the company shows some strengths, the high debt levels and lower profitability margins could pose risks for investors.
Evolution of Financial Ratios
Over the past five years, Parsons Corporation’s financial ratios indicate a trend of improving liquidity and profitability, albeit with fluctuations in debt levels. The current ratio has remained stable, while the net profit margin has shown gradual growth, reflecting better operational efficiency.
Distribution Policy
Parsons Corporation (PSN) does not pay dividends, choosing instead to reinvest earnings into growth initiatives and research & development. This strategy is typical for companies in high-growth phases where capital is directed towards expanding operations and enhancing competitive advantages. Additionally, PSN engages in share buyback programs, which can help boost shareholder value by reducing the number of outstanding shares. Overall, this approach appears to align with sustainable long-term value creation for shareholders, provided that growth investments yield favorable returns.
Sector Analysis
Parsons Corporation operates in the Industrial – Machinery sector, offering integrated solutions in defense and critical infrastructure, facing competition from various technology and engineering firms.
Strategic Positioning
Parsons Corporation (PSN) holds a significant position in the Industrial – Machinery sector, with a market capitalization of approximately $7.12B. The company operates in high-growth areas such as defense, intelligence, and critical infrastructure, where it faces competitive pressure from both established players and emerging tech disruptors. Its key products, particularly in cybersecurity and geospatial solutions, are crucial for governmental contracts, which enhance its market share. However, ongoing technological advancements require continuous innovation to maintain its edge in a rapidly changing landscape.
Revenue by Segment
This chart illustrates Parsons Corporation’s revenue by segment for the fiscal year 2024, showcasing the performance of its key business areas.
In fiscal year 2024, Parsons Corporation generated $2.74B from the Critical Infrastructure Segment and $4.01B from the Federal Solution Segment. The data indicates a strong performance in the Federal Solution Segment, outpacing the previous year’s figures. Notably, the Critical Infrastructure Segment saw a significant increase compared to 2023, where it only reported $37.9M. The overall trend suggests a strategic shift towards federal solutions, which may present both growth opportunities and potential concentration risks in revenue sources.
Key Products
Parsons Corporation offers a diverse range of products and services that cater to various sectors, including defense, intelligence, and critical infrastructure. Below is a summary of key products provided by the company:
| Product | Description |
|---|---|
| Cybersecurity Solutions | Provides offensive and defensive cybersecurity platforms, tools, and operations to protect critical infrastructure and defense systems. |
| Geospatial Intelligence Services | Offers advanced space and geospatial solutions, including threat analytics, space situational awareness, and satellite integration for government agencies. |
| Missile Defense Systems | Delivers integrated air and missile defense systems, data fusion analytics, and command and control solutions to enhance national security capabilities. |
| Intelligent Transportation Systems | Develops smart cities software and transportation management systems to improve infrastructure efficiency and safety for public authorities. |
| Environmental Management Services | Provides technology services for nuclear waste processing, bio-surveillance, and infectious disease control analytics to support public health initiatives. |
| Program and Project Management | Offers expert program management and project execution services to various sectors, ensuring efficient delivery and compliance with regulations. |
These products reflect Parsons’ commitment to delivering innovative solutions that address the complex challenges faced by its clients in both public and private sectors.
Main Competitors
The competitive landscape for Parsons Corporation (PSN) is characterized by several key players in the industrial machinery sector, offering a range of products and services that overlap with Parsons’ focus areas.
| Company | Market Cap |
|---|---|
| Donaldson Company, Inc. | 10.71B |
| SPX Technologies, Inc. | 9.79B |
| A. O. Smith Corporation | 9.69B |
| Regal Rexnord Corporation | 9.67B |
| Generac Holdings Inc. | 9.53B |
| Flowserve Corporation | 9.44B |
| Chart Industries, Inc. | 9.22B |
| Watts Water Technologies, Inc. | 9.09B |
| Tetra Tech, Inc. | 8.91B |
| CAE Inc. | 8.79B |
| Parsons Corporation | 7.12B |
In summary, Parsons Corporation operates within a competitive environment that includes leading firms such as Donaldson Company and SPX Technologies, primarily focused on the North American market with some global reach.
Competitive Advantages
Parsons Corporation (PSN) holds a robust position in the defense and critical infrastructure sectors, leveraging its expertise in cybersecurity, geospatial solutions, and transportation systems. The company’s strong government relationships and a diverse service portfolio enable it to stay ahead of competitors. Looking forward, Parsons is poised to explore new markets and develop innovative products, particularly in the areas of missile defense and smart city technologies. This strategic focus promises to enhance its growth potential and solidify its leadership in a rapidly evolving industry landscape.
SWOT Analysis
The purpose of this analysis is to evaluate Parsons Corporation’s strategic positioning through its strengths, weaknesses, opportunities, and threats.
Strengths
- Strong market presence
- Diverse service offerings
- Experienced leadership
Weaknesses
- High dependence on government contracts
- Limited dividend history
- Exposure to project delays
Opportunities
- Growth in defense spending
- Expansion in cybersecurity market
- Increasing demand for infrastructure upgrades
Threats
- Intense competition
- Regulatory changes
- Economic downturns
Overall, Parsons Corporation’s strengths in market presence and diverse service offerings position it well for future growth. However, its reliance on government contracts and external economic factors necessitates a cautious approach to risk management as it navigates emerging opportunities in cybersecurity and infrastructure.
Stock Analysis
Over the past year, Parsons Corporation (PSN) has demonstrated significant price movements, with key fluctuations that reflect the underlying trading dynamics in the market.
Trend Analysis
Analyzing the stock’s performance over the past two years, I see a percentage change of +2.19%. This indicates a bullish trend, despite a recent deceleration in momentum. Throughout this period, the stock reached notable highs of 112.69 and lows of 58.22, suggesting substantial price variation. The standard deviation of 12.82 implies a degree of volatility, which warrants attention for risk management.
Volume Analysis
In the last three months, the total trading volume for PSN has been 590.78M, with buyer-driven activity accounting for 57.03% of the total volume. Currently, volume trends are increasing, which indicates growing investor interest. However, during the recent period analyzed from September 21 to December 7, buyer dominance dipped to 41.42%, suggesting a slightly seller-dominant market. This shift may reflect cautious investor sentiment amid recent price fluctuations.
Analyst Opinions
Recent analyst recommendations for Parsons Corporation (PSN) have been largely positive, with a consensus rating of “Buy.” Analysts, including those from leading investment firms, cite strong fundamentals reflected in the company’s A- rating and robust discounted cash flow score of 5. The return on equity and assets scores of 4 and 5, respectively, indicate solid operational efficiency. However, the debt-to-equity score of 2 suggests caution. Overall, the favorable outlook reflects confidence in PSN’s growth potential, making it a compelling choice for investors in 2025.
Stock Grades
Parsons Corporation (PSN) has recently seen a mix of upgrades and maintained grades from several reputable grading companies. Below is a summary of the current stock grades:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| William Blair | Upgrade | Outperform | 2025-11-20 |
| Keybanc | Maintain | Overweight | 2025-10-20 |
| Truist Securities | Maintain | Buy | 2025-09-30 |
| Keybanc | Maintain | Overweight | 2025-09-29 |
| Baird | Maintain | Outperform | 2025-09-17 |
| Goldman Sachs | Downgrade | Neutral | 2025-08-13 |
| Keybanc | Maintain | Overweight | 2025-08-07 |
| Baird | Upgrade | Outperform | 2025-08-07 |
| Truist Securities | Maintain | Buy | 2025-07-24 |
| Keybanc | Maintain | Overweight | 2025-07-16 |
Overall, the trend in grades for PSN indicates a cautious optimism, with several upgrades suggesting positive sentiment, although the recent downgrade from Goldman Sachs highlights some volatility in investor confidence.
Target Prices
The consensus target price for Parsons Corporation (PSN) reflects a balanced outlook from analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 107 | 90 | 94.4 |
Overall, analysts anticipate that Parsons Corporation’s stock could perform within this range, suggesting a moderate level of optimism in the market.
Consumer Opinions
Consumer sentiment towards Parsons Corporation (PSN) is a mixed bag, reflecting both commendable strengths and notable areas for improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| “Excellent project management and execution.” | “Customer service could be more responsive.” |
| “Innovative solutions that meet our needs.” | “Pricing is on the higher side.” |
| “Strong commitment to sustainability.” | “Occasional delays in project timelines.” |
Overall, consumer feedback highlights Parsons Corporation’s effective project management and innovative solutions as key strengths, while concerns about customer service responsiveness and pricing remain common weaknesses.
Risk Analysis
In assessing the investment potential of Parsons Corporation (PSN), it’s crucial to understand the various risks that could impact its performance. Below is a summary of key risks to consider.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Regulatory Risk | Changes in government regulations affecting contracts and funding. | Medium | High |
| Market Competition | Increased competition in the engineering and technology sector. | High | Medium |
| Economic Downturn | A slowdown in economic growth could lead to reduced project funding. | High | High |
| Cybersecurity Threats | Potential data breaches could disrupt operations and damage reputation. | Medium | High |
| Supply Chain Issues | Disruptions in supply chains could delay project timelines. | Medium | Medium |
Among these, increased competition and economic downturns are particularly concerning, given their high probability and significant impact on PSN’s revenue and market position.
Should You Buy Parsons Corporation?
Parsons Corporation (PSN) has demonstrated a positive trajectory in profitability, with a net income of 235M and a net profit margin of 3.40% for the fiscal year 2024. The company is currently creating value, as its ROIC of 8.28% exceeds its WACC of 6.07%. However, it carries a significant debt load, with total debt of 1.42B, translating to a debt-to-equity ratio of 0.192. The company’s overall rating stands at A-, indicating strong fundamentals and financial health, but investors might want to monitor its debt levels closely.
Favorable signals
Parsons Corporation demonstrates several positive elements in its income statement evaluation. The company has achieved a remarkable revenue growth of 24.03% and a favorable gross profit growth of 16.62%. Additionally, the interest expense as a percentage of revenue is low at 0.76%, which is favorable. The company also shows strong earnings growth, with an EPS growth of 49.3%, indicating robust performance.
Unfavorable signals
On the ratios evaluation side, there are several unfavorable elements to note. The net margin stands at 3.48%, which is unfavorable, alongside a return on equity (ROE) of 9.73%. The price-to-earnings ratio (PE) is high at 41.72, and the price-to-book ratio (PB) is also elevated at 4.06. Furthermore, the dividend yield is 0%, indicating no returns to shareholders in that form.
Conclusion
While the income statement evaluation appears favorable overall, the presence of several unfavorable ratios suggests caution. Given the recent seller volume exceeds the buyer volume, it might be prudent to wait for buyers to return before making any investment decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Why Is Parsons Stock Sinking Friday? – Parsons (NYSE:PSN) – Benzinga (Dec 05, 2025)
- Why Parsons (PSN) Shares Are Trading Lower Today – Yahoo Finance (Dec 05, 2025)
- Why Did Parsons Stock (PSN) Plummet Today? – TipRanks (Dec 05, 2025)
- Parsons plunges as Peraton wins multi-billion dollar air traffic control contract (PSN:NYSE) – Seeking Alpha (Dec 05, 2025)
- Parsons stock tumbles after losing FAA air traffic control contract – Investing.com (Dec 05, 2025)
For more information about Parsons Corporation, please visit the official website: parsons.com
