Value
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.4 |
| P/S | 9.9 |
| EV/EBITDA | 2.6 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 11.1x
- ▸PEG: 0.07
- ▸Attractively valued
PSN · Why this verdict
Why Parsons (PSN) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Parsons Corporation serves the US federal government as its dominant customer with strong free cash flow conversion of 122% and a Piotroski F-Score of 7/9, but a confirmed death cross, 16% short interest, and revenue declining at -4% make this a technically challenged situation despite attractive analyst-implied upside of 25%.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The US federal government is the dominant customer for Parsons, creating a revenue base that is highly stable but also highly concentrated in a single counterparty, making the business vulnerable to government spending cuts, contract cancellations, or budget sequestrations. Bear case | Government-sourced revenue remains stable or grows in the next fiscal year with no material contract cancellations totaling more than 10% of revenue. | ↑Improving |
| CounterFederal defense and intelligence contracts are among the most durable and non-discretionary spending categories, and a major government customer can provide decades of stable backlog. | ||
Parsons is in a confirmed death cross with the 200-day moving average declining at -4.8% per month, volume distributing to the downside (falling on-balance volume), and RSI mid-range at 47, suggesting that institutional selling pressure has not yet exhausted itself. Momentum breakdown | The death cross resolves and the 200-day moving average slope turns positive (above 0%) within 6 months. | ↓Deteriorating |
| CounterDeath crosses in defense IT stocks can be temporary and driven by sector-level rotation rather than company-specific deterioration, with sharp reversals occurring when sentiment shifts. | ||
Despite price weakness, Parsons converts free cash flow at 122% of net income and has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 7.7%, suggesting the underlying business continues to execute well operationally. Quality breakdown | Free cash flow conversion remains above 100% and the beat rate stays at 3 of 4 quarters over the next 4 reporting periods. | →Stable |
| CounterFree cash flow above reported net income can reflect one-time benefits from deferred payments or favorable working capital timing that reverses in subsequent quarters. | ||
Short interest at 16% of the float indicates elevated directional bearish positioning from sophisticated investors, which in the context of a confirmed price downtrend amplifies downside risk if the stock continues to underperform. Key risks | Short interest falls below 8% as shorts cover following positive catalysts or earnings beats over the next 6 months. | ↑Improving |
| CounterDefense and government IT companies with high short interest sometimes see rapid short squeezes when contract announcements or budget approvals create unexpected positive catalysts. | ||
The US federal government is the dominant customer for Parsons, creating a revenue base that is highly stable but also highly concentrated in a single counterparty, making the business vulnerable to government spending cuts, contract cancellations, or budget sequestrations.
↑ImprovingBear case
- Expectation
- Government-sourced revenue remains stable or grows in the next fiscal year with no material contract cancellations totaling more than 10% of revenue.
CounterFederal defense and intelligence contracts are among the most durable and non-discretionary spending categories, and a major government customer can provide decades of stable backlog.
Parsons is in a confirmed death cross with the 200-day moving average declining at -4.8% per month, volume distributing to the downside (falling on-balance volume), and RSI mid-range at 47, suggesting that institutional selling pressure has not yet exhausted itself.
↓DeterioratingMomentum breakdown
- Expectation
- The death cross resolves and the 200-day moving average slope turns positive (above 0%) within 6 months.
CounterDeath crosses in defense IT stocks can be temporary and driven by sector-level rotation rather than company-specific deterioration, with sharp reversals occurring when sentiment shifts.
Despite price weakness, Parsons converts free cash flow at 122% of net income and has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 7.7%, suggesting the underlying business continues to execute well operationally.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% and the beat rate stays at 3 of 4 quarters over the next 4 reporting periods.
CounterFree cash flow above reported net income can reflect one-time benefits from deferred payments or favorable working capital timing that reverses in subsequent quarters.
Short interest at 16% of the float indicates elevated directional bearish positioning from sophisticated investors, which in the context of a confirmed price downtrend amplifies downside risk if the stock continues to underperform.
↑ImprovingKey risks
- Expectation
- Short interest falls below 8% as shorts cover following positive catalysts or earnings beats over the next 6 months.
CounterDefense and government IT companies with high short interest sometimes see rapid short squeezes when contract announcements or budget approvals create unexpected positive catalysts.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.7 |
| ROA | 2.9 |
| Gross margin | 0.6 |
| Op margin | 2.5 |
| Net margin | 1.8 |
| Current ratio | 6.3 |
| FCF quality | 9.1 |
| Moat | 3.9 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 122% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.5 |
| EPS growth | 10.0 |
- ▸Declining revenue: -4%
Momentum
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 10.0 |
| vol acceleration | 9.4 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -6.0%/30d — confirmed downtrend
- ▸Volume surge (2.7x avg) on up move
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.7 |
| Analyst rating | 5.0 |
| Price target | 9.7 |
- ▸LLM news sentiment: +0.34 (n=5)
- ▸Analyst upside: 60%
Insider
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider buying — $2,128,718 (0.049% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 3.7 |
| growth rank | 0.7 |
Technical
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 7.3 |
| 52w position | 0.0 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.4 |
| days to cover | 5.5 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 3.4 |
| beta | 9.1 |
| debt equity | 7.3 |
| news risk | 6.0 |
- ▸High short interest: 15%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| surprise avg | 7.4 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (7)
- ASYMMETRY:2.6>=1.5
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.50
- NEWS_BOOST:ANALYST_CLUSTER(4)
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.1<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.63
Upside
+39.4%
Downside
15.0%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 34, MACD bearish
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -52% (>40% off 52w high)
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: ASYMMETRY:2.6>=1.5. Top dim: Value at 7.9; weakest: Peer rank at 3.7. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Value at 7.9, Insider at 7.9, and Sentiment at 7.0; the weakest are Peer rank at 3.7, Momentum at 4.1, and Quality at 4.3. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 2.63 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Federal Government Revenue Concentration
Trip ifGovernment contract backlog falls below $5 billion or a single contract cancellation exceeds 5% of annual revenue.
- P2Death Cross Confirmed Downtrend
Trip if200-day moving average slope remains below -3% per month for 4 consecutive months without recovery.
- P3Strong Fcf Conversion Beat Streak
Trip ifFree cash flow conversion falls below 70% of net income in any reported annual period.
- P4High Short Interest 16pct
Trip ifShort interest rises above 20% of float as reported in any bi-monthly short interest data release.