The stock market hates uncertainty, and Parsons Corp. (NYSE: PSN) is serving it up.
The engineering and defense company lost a heavily promoted $12.5 billion Federal Aviation Administration (FAA) contract bid in December and faces top-line pressure from the wind-down of a large government contract
The stock has been hammered, trading down nearly 40% over the past six months, including a 21% single-day drop in December. Yet as revenue expectations decline, actual profitability is improving, with margins hitting a record high in the first quarter. In addition, its backlog reached a new high, driven by solid contract wins at the start of the year.
A tale of two segments Parsons is a provider of integrated solutions and services for the security, defense, and infrastructure markets. It operates two primary segments, federal solutions and critical infrastructure, each of which contributes roughly half of total revenue. The company’s troubles began in December, when it lost the bid to modernize the FAA’s air traffic control system.