Investment Thesis
Parsons exhibits severe fundamental deterioration despite anomalous revenue growth, evidenced by negative operating cash flow (-$3.7M), negative free cash flow (-$18.6M), and declining net income (-21.9% YoY). The massive 14,426% revenue surge appears to be a one-time acquisition rather than sustainable organic growth, while catastrophically low returns on capital (ROE 2.0%, ROA 0.9%) indicate value destruction for shareholders.
Strengths
- Debt-to-equity ratio of 0.57x provides reasonable financial leverage headroom
- Current ratio of 1.75x indicates adequate short-term liquidity position
- Positive operating income of $95.7M provides some earnings foundation
Risks
- Negative operating cash flow of -$3.7M with $1.5B debt outstanding is unsustainable and signals working capital deterioration or earnings quality issues
- Declining net income (-21.9% YoY) despite massive revenue growth indicates the acquired revenue is low-margin or integration-burdened
- Abysmal returns on capital (ROE 2.0%, ROA 0.9%) demonstrate the company destroys shareholder value despite $6B asset base
- The 14,426% revenue anomaly likely represents a major acquisition whose integration risks are evident in collapsing profitability and cash generation
Key Metrics to Watch
- Operating cash flow trend - must achieve sustained positive OCF to remain solvent
- Free cash flow recovery and debt service capability
- Organic revenue growth ex-acquisition to assess underlying business quality
- Return on equity and return on assets trajectory toward industry benchmarks
Financial Metrics
Revenue
1.5B
Net Income
52.9M
EPS (Diluted)
$0.49
Free Cash Flow
-18.6M
Total Assets
6.0B
Cash
283.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
6.4%
Net Margin
3.5%
ROE
2.0%
ROA
0.9%
FCF Margin
-1.2%
Balance Sheet & Liquidity
Current Ratio
1.75x
Quick Ratio
1.75x
Debt/Equity
0.57x
Debt/Assets
54.2%
Interest Coverage
5.98x
Long-term Debt
1.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T16:09:23.804212 |
Data as of: 2026-03-31 |
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