Parsons has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 10.3% to $81.01 per share while the index has gained 5.8%.
Is PSN a buy right now? Find out in our full research report, it’s free.
Why Does PSN Stock Spark Debate?
Delivering aerospace technology during the Cold War-era, Parsons (NYSE: PSN) offers engineering, construction, and cybersecurity solutions for the infrastructure and defense sectors.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Parsons grew its sales at an impressive 10.7% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Parsons’s remarkable 12.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.
One Reason to be Careful:
Weak Backlog Growth Points to Soft Demand
We can better understand Defense Contractors companies by analyzing their backlog. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Parsons’s future revenue streams.
Parsons’s backlog came in at $8.94 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 3%. This performance was underwhelming and suggests that increasing competition is causing challenges in winning new orders. 
Final Judgment
Parsons has huge potential even though it has some open questions, but at $81.01 per share (or 24.8× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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