Shares of Parsons Corp (PSN, Financial) experienced a notable increase of 4% today, driven by a positive analyst note that reaffirmed a buy recommendation. This movement stands in contrast to the broader market, represented by the S&P 500, which saw a more modest gain of 0.8%.
Tobey Sommer from Truist Securities, who is optimistic about the company's future, pointed to Parsons' solid organic sales growth this year as a promising sign for its 2026 prospects. Sommer expects growth to be in the mid-to-high teen percent range for 2025, with a more tempered 4% growth in 2026. This outlook has energized investors, pushing the stock higher.
From a valuation perspective, Parsons (PSN, Financial) is currently seen as undervalued despite its premium of 27% above peers in the government services sector, compared to a historical average of 20%. The stock trades at a price-to-earnings (P/E) ratio of 30.06, a price-to-book (P/B) ratio of 3.1, and an enterprise value-to-EBITDA (EV/EBITDA) multiple of 11.43. Parsons also boasts an Altman Z-Score of 3.46, indicating strong financial stability.
The company's GF Value suggests it is modestly undervalued, with a calculated figure of $79.90. For further details on its GF Value, please refer to the GF Value page. This assessment aligns with the positive outlook for Parsons' strategic partnerships and contract wins, including collaborations with IBM on air traffic control systems and infrastructure projects in Qatar.
Financial strength is underscored by an expanding operating margin and solid earnings growth, evidenced by a 67.9% increase in EBITDA over the past year. The company's operating cash flow is also noteworthy, with significant growth of 70.9% over the same period. These metrics position Parsons (PSN, Financial) as a favorable option for investors looking for a blend of growth and stability in the defense and infrastructure sectors.
