Is Parsons Corporation's (NYSE:PSN) Recent Price Movement Underpinned By Its Weak Fundamentals?

Simply Wall St.01:15

With its stock down 15% over the past week, it is easy to disregard Parsons (NYSE:PSN). We, however decided to study the company's financials to determine if they have got anything to do with the ...

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We, however decided to study the company's financials to determine if they have got anything to do with the ...</p>\n\n<a href=\"https://finance.yahoo.com/news/parsons-corporations-nyse-psn-recent-171559008.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NYSE","symbol_name":"纽交所","start_time":0,"source_url":"https://finance.yahoo.com/news/parsons-corporations-nyse-psn-recent-171559008.html","article_id":"2485044867","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/IyMkmLaJHOnNINjqghKGMQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/4a39ac79965dbdc4c586d12ea5141f62"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485044867","pubTimestamp":1732209359,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"With its stock down 15% over the past week, it is easy to disregard Parsons . We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention. Particularly, we will be paying attention to Parsons'  ROE today.ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.Return on equity can be calculated by using the formula:. Return on Equity = Net Profit  ÷ Shareholders' Equity. Earnings growth is an important metric to consider when valuing a stock. It’s important for an investor to know whether the market has priced in the company's expected earnings growth . By doing so, they will have an idea if the stock is headed into clear blue waters or i","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NYSE":"纽交所","BK4123":"调查和咨询服务","PSN":"Parsons Corp","BK4187":"航天航空与国防","LU0566484027.USD":"安本美国小盘成长股","LU2065731478.USD":"ALLSPRING (LUX) WORLDWIDE FUND - SMALL CAP INNOVA \"I\" (USD) ACC","LU1559883803.SGD":"Aberdeen Standard SICAV I - North American Smaller Companies Fund A Acc SGD-H"},"translate_title":"帕森斯公司（纽约证券交易所股票代码：PSN）最近的价格走势是否受到其疲软基本面的支撑？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NYSE":1,"PSN":1},"content_text":"With its stock down 15% over the past week, it is easy to disregard Parsons (NYSE:PSN). We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention. Particularly, we will be paying attention to Parsons'  ROE today. \n ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. \n View our latest analysis for Parsons \n How Do You Calculate Return On Equity? \n Return on equity can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Parsons is:\n5.5% = US$132m ÷ US$2.4b (Based on the trailing twelve months to September 2024).\n The 'return' is the income the business earned over the last year. That means that for every $1 worth of shareholders' equity, the company generated $0.05 in profit. \n Why Is ROE Important For Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or \"retains\" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. \n Parsons' Earnings Growth And 5.5% ROE \n At first glance, Parsons' ROE doesn't look very promising. Next, when compared to the average industry ROE of 20%, the company's ROE leaves us feeling even less enthusiastic. Given the circumstances, the significant decline in net income by 3.7% seen by Parsons over the last five years is not surprising. We believe that there also might be other aspects that are negatively influencing the company's earnings prospects. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. \n That being said, we compared Parsons' performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 11% in the same 5-year period. \n\n\n\n  NYSE:PSN Past Earnings Growth November 21st 2024\n \n\n Earnings growth is an important metric to consider when valuing a stock. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. What is PSN worth today? The  intrinsic value infographic in our free research report  helps visualize whether PSN is currently mispriced by the market. \n Is Parsons Efficiently Re-investing Its Profits? \n Parsons doesn't pay any regular dividends, meaning that the company is keeping all of its profits, which makes us wonder why it is retaining its earnings if it can't use them to grow its business. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline. \n Conclusion \n Overall, we have mixed feelings about Parsons. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485044867"}