Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.7 |
| P/S | 9.7 |
| EV/EBITDA | 3.3 |
| Fwd P/E | 7.9 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.2x
- ▸PEG: 0.20
- ▸Attractively valued
PSN · Why this verdict
Why Parsons (PSN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableBear 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.
→StableMomentum 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.
→StableKey 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.
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.
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
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 8.7 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 3.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.9%/30d — confirmed downtrend
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.9 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 22%
Insider
6.6/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 5.2 |
- ▸Modest insider buying — $2,128,718 (0.035% of mkt cap)
Peer rank
2.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.7 |
| quality rank | 3.9 |
| growth rank | 0.9 |
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 3.8 |
| 52w position | 2.6 |
| gap | 5.0 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.7 |
| days to cover | 5.2 |
| volatility | 1.4 |
| put call | 8.7 |
| implied vol | 2.4 |
| beta | 9.1 |
| debt equity | 7.3 |
- ▸High short interest: 17%
- ▸High IV: 65%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 25%| Component | Sub-score |
|---|---|
| erm | 5.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.4<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.41
Upside
+6.1%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 48
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.4<1.5@spot) reinforce the read. Current asymmetry R:R is 0.41 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.1, Sentiment at 6.8, and Insider at 6.6; the weakest are Peer rank at 2.1, Technical at 3.8, and Quality at 4.3. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.41 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.