Parsons Corporation (PSN) | Investment Case

1. Company Snapshot

1.a. Company Description

Parsons 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.

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1.b. Last Insights on PSN

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1.c. Company Highlights

Last Price	64.47
Change Percentage	-1.63%
Open	64.79
Previous Close	65.53
Market Cap ( Millions)	6884
Volume	178390
Year High	89.5
Year Low	54.56
M A 50	66.48
M A 200	74.23

FCF Yield	5.96%
Dividend Yield	0.00%
ROE	9.48%
Debt / Equity	56.04%
Net Debt / EBIDTA	183.67%
Price To Book	2.6
Price Earnings Ratio	28.53
Price To FCF	16.77
Price To sales	1.08
EV / EBITDA	14.3

2. Strong Q4 Results Drive Confidence in Long-Term Growth

The company delivered a robust financial performance in Q4 FY2025, with total revenue growth of 11% year-over-year and 8% on an organic basis, excluding the confidential contract. Adjusted EBITDA margin expanded 110 basis points to 9.6%, driven by strong performance in the critical infrastructure segment. For the full year, revenue increased 12% to $6.35 billion, while adjusted EBITDA margin reached a record 9.6%. Earnings per share (EPS) came in at 'None' relative to estimates of $0.8.

Publication Date: Feb -17

                                    📋 Highlights
                                    Total Revenue Growth::
                                                12% total revenue growth in fiscal 2025, with 8% organic revenue growth excluding a confidential contract.
Adjusted EBITDA Expansion::
                                                Adjusted EBITDA margin expanded 60 basis points to a record 9.6%, with $609 million in adjusted EBITDA.
Acquisitions & Share Repurchases::
                                                Closed three acquisitions totaling $145 million (net of cash) and repurchased $125 million in shares.
Critical Infrastructure Performance::
                                                Critical infrastructure adjusted EBITDA surged 73% to $328 million, achieving a 10.4% margin (350 bps increase).
Backlog & 2026 Guidance::
                                                $8.7 billion backlog (73% funded) and 2026 revenue guidance of $6.5–$6.8 billion, with adjusted EBITDA of $615–$675 million.

                                

Segment Performance

The critical infrastructure segment demonstrated significant growth, with revenue increasing 15% on an organic basis and adjusted EBITDA margin expanding 420 basis points to 10.6%. The federal solutions segment saw a 9% increase in fourth-quarter revenue on an organic basis, excluding the confidential contract. However, including the contract, revenue decreased 22% from the prior year period due to lower volume on the fixed-price confidential contract and recent execution challenges.

Outlook and Guidance

Looking ahead, the company expects to drive long-term shareholder value by achieving mid-single-digit or better annual organic revenue growth, supplemented with accretive acquisitions. For 2026, revenue is expected to be between $6.5 and $6.8 billion, representing 4.5% growth at the midpoint of the range. Adjusted EBITDA is expected to be between $615 and $675 million, with a margin of 9.7% at the midpoint of the revenue and adjusted EBITDA guidance ranges. Analysts estimate next year's revenue growth at 7.9%.

Valuation and Metrics

With a P/E Ratio of 22.53 and EV/EBITDA of 14.85, the company's valuation appears reasonable given its strong growth prospects. The company's ROIC of 8.9% and ROE of 11.81% indicate efficient capital allocation and profitability. The Net Debt / EBITDA ratio of 1.76 suggests a manageable debt burden. As the company continues to execute on its growth strategy, its valuation multiples may expand further.

Growth Drivers

The company is well-positioned to capture growth in areas such as cyber and electronic warfare, space and missile defense, and critical infrastructure protection. With a $11 billion unbooked pipeline and a strong track record of converting pipeline into revenue, the company is poised for continued growth. Additionally, the company's strategic acquisitions, such as Altamira Technologies Corporation, are expected to drive long-term value creation.

3. NewsRoom

Bear Of The Day: Parsons (PSN)

Feb -20

Source: zacks.com

Parsons Corporation (PSN) Presents at Barclays 43rd Annual Industrial Select Conference Transcript

Feb -18

Source: seekingalpha.com

U.S. Cyber Command Issues Parsons' Subsidiary Intent to Award for Joint Cyber Hunt Kit (JCHK) Production

Feb -18

Source: globenewswire.com

Parsons to Present at the Barclays 43rd Annual Industrial Select Conference

Feb -13

Source: globenewswire.com

Parsons (NYSE:PSN) Shares Gap Down After Earnings Miss

Feb -12

Source: defenseworld.net

Why Parsons Stock Plummeted Today

Feb -11

Source: fool.com

Parsons Corporation (PSN) Q4 2025 Earnings Call Transcript

Feb -11

Source: seekingalpha.com

Parsons (PSN) Lags Q4 Earnings and Revenue Estimates

Feb -11

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.63%)

6. Segments

Federal Solutions

Expected Growth: 6.5%

Parsons Corporation's Federal Solutions segment growth of 6.5% is driven by increasing demand for cybersecurity, intelligence, and defense services from government agencies. Additionally, the company's strategic acquisitions, investments in digital transformation, and strong order backlog contribute to its growth momentum.

Critical Infrastructure

Expected Growth: 6.8%

Parsons Corporation's Critical Infrastructure segment growth of 6.8% is driven by increasing government investments in infrastructure modernization, rising demand for cybersecurity and threat protection, and growing adoption of digital twin technologies. Additionally, the company's strategic acquisitions and partnerships have expanded its service offerings and strengthened its market position.

7. Detailed Products

Cybersecurity Solutions

Parsons Corporation provides cybersecurity solutions to protect critical infrastructure, networks, and systems from cyber threats.

Intelligent Transportation Systems (ITS)

Parsons designs and implements intelligent transportation systems to improve traffic flow, reduce congestion, and enhance safety.

Environmental Remediation Services

Parsons provides environmental remediation services to clean up contaminated sites, restore ecosystems, and promote sustainable development.

Infrastructure Engineering and Construction

Parsons designs, builds, and maintains critical infrastructure, including roads, bridges, airports, and buildings.

Geospatial and Data Analytics

Parsons provides geospatial and data analytics services to help clients make informed decisions, optimize operations, and improve performance.

Defense and Security Solutions

Parsons provides defense and security solutions to protect people, infrastructure, and assets from threats.

8. Parsons Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Parsons Corporation is moderate, as there are some alternative products and services available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Parsons Corporation is low, as customers have limited options and the company has a strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Parsons Corporation is moderate, as the company relies on a few key suppliers, but has some flexibility in its supply chain.

Threat Of New Entrants

The threat of new entrants for Parsons Corporation is high, as the industry has low barriers to entry and new companies can easily enter the market.

Intensity Of Rivalry

The intensity of rivalry for Parsons Corporation is high, as the industry is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.84%
Debt Cost	4.31%
Equity Weight	71.16%
Equity Cost	8.22%
WACC	7.09%
Leverage	40.54%

11. Quality Control: Parsons Corporation passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Mueller Water Products

A-Score: 5.4/10

Value: 4.0

Growth: 6.9

Quality: 7.3

Yield: 2.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

Gates Industrial

A-Score: 4.9/10

Value: 5.5

Growth: 4.7

Quality: 6.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

SPX Technologies

A-Score: 4.8/10

Value: 1.7

Growth: 6.0

Quality: 7.0

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

EnPro

A-Score: 4.7/10

Value: 2.6

Growth: 4.6

Quality: 6.1

Yield: 2.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

Parsons

A-Score: 4.5/10

Value: 5.6

Growth: 6.8

Quality: 5.7

Yield: 0.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Middleby

A-Score: 3.8/10

Value: 5.0

Growth: 6.1

Quality: 2.8

Yield: 0.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.67%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.09%

Parsons Corporation - US70202L1026

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PSN

1.c. Company Highlights

Strong Momentum

Expensive

Less Volatile

Earnings Beats

Revenues Beats

Medium Volatility

Average Growth

Average Yield

Fairly Valued

Stable Momentum

Earnings Miss

Weak Momentum

Average Quality

Revenues Miss

2. Strong Q4 Results Drive Confidence in Long-Term Growth

Segment Performance

Outlook and Guidance

Valuation and Metrics

Growth Drivers

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.63%)

6. Segments

Federal Solutions

Expected Growth: 6.5%

Critical Infrastructure

Expected Growth: 6.8%

7. Detailed Products

Cybersecurity Solutions

Intelligent Transportation Systems (ITS)

Environmental Remediation Services

Infrastructure Engineering and Construction

Geospatial and Data Analytics

Defense and Security Solutions

8. Parsons Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Parsons Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

64.46$

Current Price

64.47$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA