Parsons (PSN): Buy, Sell, or Hold Post Q2 Earnings?
Yahoo Finance ·
Parsons (PSN): Buy, Sell, or Hold Post Q2 Earnings? Adam Hejl Wed, September 2, 2026 at 11:40 AM EDT 3 min read PSN Parsons has gotten torched over the last six months - since March 2026, its stock price has dropped 32% to $46.15 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation. Is now the time to buy Parsons, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it's free . Even though the stock has become cheaper, we're cautious about Parsons. Here are three reasons we avoid PSN, plus one stock we'd rather own. In addition to reported revenue, backlog is a useful data point for analyzing Defense Contractors companies. 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 $9.26 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 1.1%. This performance was underwhelming and suggests that increasing competition is causing challenges in winning new orders. Forecasted revenues by Wall Street analysts signal a company's potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite. Over the next 12 months, sell-side analysts expect Parsons's revenue to rise by 4.1%. While this projection implies its newer products and services will fuel better top-line performance, it is still below the sector average. Growth gives us insight into a company's long-term potential, but how capital-efficient was that growth? A company's ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity). Parsons historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.9%, somewhat low compared to the best industrials companies that consistently pump out 20%+. Parsons's business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 14.8× forward P/E (or $46.15 per share). This valuation is reasonable, but the company's shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. We'd suggest looking at a safe-and-steady industrials business benefiting from an upgrade cycle . WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE . Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today .
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