Parsons (PSN) Q3 Earnings Lag Estimates
Parsons (PSN) delivered earnings and revenue surprises of -12.00% and 0.10%, respectively, for the quarter ended September 2021. Do the numbers hold clues to what lies ahead for the stock?
Parsons (PSN) came out with quarterly earnings of $0.44 per share, missing the Zacks Consensus Estimate of $0.50 per share. This compares to earnings of $0.57 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -12%. A quarter ago, it was expected that this software and infrastructure services provider would post earnings of $0.51 per share when it actually produced earnings of $0.32, delivering a surprise of -37.25%.
Over the last four quarters, the company has surpassed consensus EPS estimates just once.
Parsons, which belongs to the Zacks Technology Services industry, posted revenues of $956.05 million for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 0.10%. This compares to year-ago revenues of $1 billion. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Parsons shares have lost about 4.9% since the beginning of the year versus the S&P 500's gain of 23.3%.
What's Next for Parsons?
While Parsons has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Parsons was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.50 on $925.63 million in revenues for the coming quarter and $1.67 on $3.64 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Technology Services is currently in the bottom 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Parsons Corporation (PSN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research