PSN - Parsons Corporation: Impressive Recent Performance Means Lucrative Future

2024-04-11 17:10:44 ET

Summary

• PSN has achieved consistent revenue growth, owing to its deep expertise and relationships with Federal agencies. Recent growth reflects M&A and growing tailwinds.
• We expect infrastructure spending, technological modernization, and cybersecurity to drive growth in the coming years, with scope for HSD/LDD growth inclusive of M&A.
• PSN’s margin development has been slow, but FCF has moved proportionately, creating the potential for growing distributions in the coming years.
• PSN is outgrowing its peers, illustrating its market share growth. The company does lag noticeably behind in margins, however.
• The company’s recent share price run has eliminated any near-term upside, now requiring management to continue to outperform.

Company Description and Thesis

Parsons Corporation ( PSN ) is a leading technology-driven engineering services firm that provides solutions to various sectors, including defense, intelligence, infrastructure, and cybersecurity. The company offers a wide range of services, including engineering, construction, cybersecurity, and intelligence analysis, to both government and commercial clients worldwide.

PSN is a high-quality business, primarily due to its strong business model and lucrative industry. The company is benefiting from infrastructure and technology spending, with deep expertise and relationships within the industry....

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