To The Moon

$Parsons Corp(PSN)$ $Dave Inc(DAVE)$ $One Stop Systems(OSS)$ 

🎯 Executive Summary

I’m extremely confident Parsons Corp (NYSE: PSN) is engineering a structural breakout at the intersection of infrastructure and defence. Q3 2025 delivered adjusted EPS of $0.86 versus consensus of $0.76, a 13–15 % beat, on revenue of $1.62 billion (-10 % YoY from $1.81 billion) as the confidential contract wind-down masked resilient core growth. The funded backlog surged to $6.4 billion, representing 72 % of total $8.8 billion, the highest since IPO. This record visibility aligns with rising US federal defence allocations projected above $1 trillion in FY 2026 and the $1.2 trillion IIJA infrastructure stimulus. Together they place Parsons among the best-positioned contractors to capture Indo-Pacific and domestic modernisation flows. CEO Carey Smith reinforced this strength, saying the firm delivered double-digit growth excluding the confidential contract, margin expansion, and 135 % free-cash-flow conversion while maintaining balance-sheet flexibility for accretive M&A. This isn’t fleeting momentum; it’s a rerating blueprint taking shape across multi-billion pipelines like FAA modernisation and the $15 billion Pacific Deterrence Initiative.

💰 Financial Performance Breakdown

Revenue $1.62 billion (-10 % YoY). Ex-confidential, organic growth ~9 % and total ~14 %. Adjusted EBITDA $158 million (-5 % YoY) with margins expanding to 9.8 % (+60 bps). Critical Infrastructure led with 18 % revenue growth (13 % organic) and margins of 10.3 % (+360 bps). Federal Solutions declined 29 % on the contract exit but recovered margin to 9.2 % from 8.3 %. Book-to-bill 1.0× overall (1.1× Infrastructure, 0.8× Federal). Operating cash flow $163 million and free-cash-flow conversion 135 %. Guidance was trimmed: FY 2025 revenue $6.4–$6.5 billion (from $6.48–$6.68 billion) but EBITDA $600–$630 million and cash-flow midpoints unchanged, indicating tighter cost control and higher margins on lower sales.

🛠️ Strategic Headwinds & Execution Risk

The Federal Solutions segment remains the weak link, book-to-bill 0.8× and task-order delays persisting amid procurement bottlenecks and labour/material inflation. Overexpansion to staff the $50 billion-plus pipeline could strain cost discipline if award timing slips. Management must restore credibility after missing its H2 growth target and demonstrate award acceleration through Q4 and FAA adjudications. Macro-political risks include federal shutdown extensions and Indo-Pacific tension affecting project sequencing, yet profit guidance stability shows underlying resilience.

🧠 Analyst & Institutional Sentiment

Market sentiment is improving. Analyst consensus centres around a Buy rating with price targets in the low-to-mid $90s and some stretch calls to $100 as backlog execution strengthens. ETF representation in iShares US Infrastructure ($IFRA) and SPDR Future Security ($FITE) enhances visibility among defence-infrastructure allocations. Institutional ownership above 95 % signals confidence from long-only capital seeking defensive earnings compounding through 2026.

📉📈 Technical Setup

I’m reading a constructive chart formation on the 4-hour timeframe. Price at $87.40 is riding above the 21 EMA and 55 EMA, with a clean bullish crossover in view. RSI 55.2 confirms headroom before overbought territory, and MACD has turned positive with a rising histogram. Keltner and Bollinger bands are expanding after weeks of compression between $83 and $85. A decisive break above $92 unlocks targets at $95 (base) and $105 (stretch). Stop loss at $80 protects capital against contract timing volatility. Volume spikes above 1.5× 20-day average would validate a trend confirmation.

🌍 Macro & Peer Context

The US Infrastructure Investment and Jobs Act and heightened defence outlays create a secular up-cycle in civil and mission-critical projects. Parsons sits between Jacobs Engineering (J) and AECOM (ACM) in scale yet outpaces both on margin momentum and critical infrastructure exposure. Its 18 % segment growth beats peer averages of 10–14 %. The Pacific Deterrence Initiative and Saudi Diriyah contract expansions anchor its global reach beyond US federal budgets, diversifying execution risk.

📊 Valuation & Capital Health

At $87.40 and annualised EPS near $3.40, PSN trades around 25× forward earnings, in-line with sector averages. EV/EBITDA ~18× and FCF yield ~4 % reflect quality and visibility premia. Debt remains modest at ~1.2× EBITDA, leaving ample capacity for targeted acquisitions and shareholder returns. Maintaining guidance midpoints despite top-line pressure confirms capital discipline and a robust liquidity position.

⚖️ Verdict & Trade Plan

I am bullish on PSN. Preferred swing entry zone $84–$88, with confirmation on a volume break above $90. Base target $95, stretch $105 on backlog conversion or major award announcements. Stop $80. Catalysts: Q4 earnings (Feb 2026), FAA modernisation decision, and Indo-Pacific task-order releases. A Federal book-to-bill return to 1.0× would reignite the bull cycle.

🏁 Conclusion

I’m treating Parsons as a blueprint for a multi-year re-rating driven by execution and visibility. Revenue noise and procurement delays are short-term brushstrokes on a larger canvas of structural growth. The market hesitates; I see discipline and durability forming the foundation of the next leg higher. Execution beats expectation every time.

📌 Key Takeaways

• Q3 2025 Adjusted EPS $0.86 (+13–15 % beat) and Revenue $1.62 B (-10 % YoY) with 9–14 % organic growth ex-contract.

• Adjusted EBITDA $158 M (-5 % YoY), margin 9.8 % (+60 bps); Critical Infrastructure margin 10.3 % (+360 bps).

• Total backlog $8.8 B; funded backlog $6.4 B (72 %) record since IPO.

• FY 2025 guidance: Revenue $6.4–$6.5 B; EBITDA $600–$630 M; cash flow $380–$460 M midpoints unchanged.

• Technical levels: support $83–$85, resistance $90–$92, targets $95 and $105, stop $80.

• Macro drivers: IIJA $1.2 T funding and FY 2026 defence budget > $1 T support sustained contract flow.

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