|
Related Topics
|
Category: Stock Market and Parsons Corporation
Date: 19 September 2019 Stock Price: $37.56 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Parsons Corporation a provider of technology solutions in defence and intelligence industry
|
About Parsons Corporation
We are a leading provider of technology-driven solutions in the defense, intelligence and critical infrastructure markets. We provide technical design and engineering services and software to address our customers’ challenges. We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, defense, military training, connected communities, physical infrastructure and mobility solutions. By combining our talented team of professionals and advanced technology, we help solve complex technical challenges to enable a safer, smarter and more interconnected world.
The image below shows Parsons Corporations growth strategy.
The image below shows Parsons Corporations growth strategy.
Overview of Parsons' latest earnings report
The numbers we are interested in (for the quarter):
- Revenues: $900.723 million (down from $989.742 million from the same quarter of the previous year)
- Revenues decreased by -9.1% over the last 12 months
- Cost of revenues: $668.211 million (down from $784.723 million for the same quarter of the previous year)
- Cost of revenues decreased by -15.2% over the last 12 months
- Net income: $148.381 million (up from $40.259 million loss for the same quarter of the previous year)
- Diluted earnings per share: $1.83 (up from $0.44 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 81.074 million (down from 92.336 million for the same quarter of the previous year)
- Cash and cash equivalents: $280.221 million
- Cash and cash equivalents per share: $3.45
- Cash and cash equivalents makes up 9.2% of Parson Corporation's market capital
- Cash and cash equivalents makes up 10.7% of Parsons Corporation's total assets
- Accounts receivable: $623.286 million
- Accounts receivable makes up 23.86% of Parsons Corporation's total assets
- Accounts receivable makes up 23.86% of Parsons Corporation's total assets
- Cash generated from operations (for 6 months) : $179.140 million
- Cash generated from operations per share (for 6 months): $2.20
Parsons Corporation's management commentary on the results and earnings guidance
CENTREVILLE, Va., Aug. 13, 2019 /PRNewswire/ -- Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2019.
CEO Commentary
"We reported strong second quarter results in both our Federal Solutions and Critical Infrastructure markets," said Chuck Harrington, Chairman, CEO and President of Parsons Corporation. "Our margin expansion continues and our ability to win new business and grow existing contracts is enabling us to build backlog and drive top-line growth in high priority markets. Our focus on cyber, intelligence, space and intelligent transportation markets and growing our artificial intelligence, autonomous systems (including hypersonics), cloud computing and IoT technologies are paying off with contract wins and award fees. The strategic acquisition of QRC enhances our existing products portfolio, expands our presence in the important U.S. special operations and intelligence communities, and improves our revenue growth and margin profile. Our robust balance sheet ideally positions us for continued investment in our strategic initiatives."
Second Quarter 2019 Key Performance Indicators
The Company's strong book-to-bill ratio and backlog increase positions it for continued top-line growth. Second quarter operating cash flow was less than anticipated, but the Company expects solid cash flow from operations for the full year, in-line with, or above, underlying earnings. The Company's operating cash flow and significant borrowing capacity will enable ongoing investments in its growth strategy.
Second Quarter 2019 Significant Contract Wins
Parsons continues to win key awards across both its Federal Solutions and Critical Infrastructure segments. The Company's strong customer relationships, rigorous capture processes, and investments in technology and people have led to greater success in winning new contracts and expanding existing contracts.
CEO Commentary
"We reported strong second quarter results in both our Federal Solutions and Critical Infrastructure markets," said Chuck Harrington, Chairman, CEO and President of Parsons Corporation. "Our margin expansion continues and our ability to win new business and grow existing contracts is enabling us to build backlog and drive top-line growth in high priority markets. Our focus on cyber, intelligence, space and intelligent transportation markets and growing our artificial intelligence, autonomous systems (including hypersonics), cloud computing and IoT technologies are paying off with contract wins and award fees. The strategic acquisition of QRC enhances our existing products portfolio, expands our presence in the important U.S. special operations and intelligence communities, and improves our revenue growth and margin profile. Our robust balance sheet ideally positions us for continued investment in our strategic initiatives."
Second Quarter 2019 Key Performance Indicators
The Company's strong book-to-bill ratio and backlog increase positions it for continued top-line growth. Second quarter operating cash flow was less than anticipated, but the Company expects solid cash flow from operations for the full year, in-line with, or above, underlying earnings. The Company's operating cash flow and significant borrowing capacity will enable ongoing investments in its growth strategy.
- Book-to-bill ratio: 1.0x on net bookings of $978 million. Trailing 12-month 1.2x on net bookings of $4.7 billion.
- Total backlog: $8.5 billion, a 10% increase over the second quarter of 2018.
- Cash flow provided by operating activities: $12 million compared to $57 million in the second quarter of 2018.
- Debt: total and net debt were $249 million and $46 million, respectively. Following the acquisition of QRC, as of June 30, 2019, pro forma debt was approximately $389 million and pro forma net debt was approximately $264 million, positioning the Company for continued investment in the implementation of its strategy. The Company defines net debt as total debt less cash and cash equivalents.
Second Quarter 2019 Significant Contract Wins
Parsons continues to win key awards across both its Federal Solutions and Critical Infrastructure segments. The Company's strong customer relationships, rigorous capture processes, and investments in technology and people have led to greater success in winning new contracts and expanding existing contracts.
- Awarded $147 million of additional scope on our Ballistic Missile Defense System contracts with the Missile Defense Agency in areas including cyber, command and control, foreign military sales and targets and countermeasures.
- Awarded more than $140 million of new contracts for cybersecurity, software development, data analytics, systems engineering and integration, and mission system survivability by the Air Force Research Laboratory, Army Cyber, National Geospatial-Intelligence Agency, and the Defense Threat Reduction Agency.
- Selected to serve as the lead designer for the $1.2 billion Federal Way Link Extension project for Sound Transit in Seattle. Parsons portion of this contact is currently worth $87 million.
- Awarded the program management contract for the California Delta Water Conveyance Modernization Project, a multi-billion dollar water transfer project to improve sustainability and reliability of the water supply for human and environmental uses from the Sacramento River. Parsons' initial contract value on this project is $36 million with significant growth potential over the life of the program.
- Selected as one of multiple awardees on the $7.5 billion ceiling DISA Systems Engineering, Technology and Innovation contract, expanding the Company's robust IDIQ and OTA portfolio.
Parsons Corporation (NYSE:PSN) stock price history
The image below, obtained from Google, shows the stock price history of Parsons Corporation (NYSE: PSN) since its listing in early May 2019. And it's been a very good time for Parsons Corporation stockholders. At it's listing date it was trading at around $30 and its currently trading at $38.12. So the stock has grown by 27% over the last 5 months or so. Parsons Corporation is trading at a lot closer to its 52 week high than it is to its 52 week low, which to us is a clear indication that the short term sentiment and momentum of the stock is very positive.
Parsons Corporation (NYSE: PSN) latest stock valuation
So based on the earnings report of Parsons Corporation (NYSE:PSN) and the latest earnings guidance provided what do we value Parsons Corporation (PSN) stock at? Based on the earnings reported by the group our valuation model provides a target (full value) price for Parsons Corporation at $62.80 a stock. We therefore believe the stock of Parsons Corporation is undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $62.8 Therefore we believe the stock remains a good buy below $56.50. Therefore the current price is a good entry point into the stock based on our valuation models. We rate the stock of Parsons Corporation a strong buy
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $62.8 Therefore we believe the stock remains a good buy below $56.50. Therefore the current price is a good entry point into the stock based on our valuation models. We rate the stock of Parsons Corporation a strong buy