Critical Review: Parsons (NYSE:PSN) and Star Equity (NASDAQ:STRR)

Star Equity (NASDAQ:STRR) and Parsons (NYSE:PSN) are both industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Risk and Volatility

Star Equity has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Parsons has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Profitability

This table compares Star Equity and Parsons’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Star Equity	-4.35%	-4.21%	-2.39%
Parsons	2.33%	8.11%	3.74%

Insider and Institutional Ownership

3.8% of Star Equity shares are held by institutional investors. Comparatively, 98.0% of Parsons shares are held by institutional investors. 31.6% of Star Equity shares are held by insiders. Comparatively, 1.3% of Parsons shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Star Equity and Parsons”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Star Equity	$209.75 million	0.17	-$5.92 million	($3.06)	-3.10
Parsons	$6.36 billion	0.84	$241.14 million	$1.37	36.77

Parsons has higher revenue and earnings than Star Equity. Star Equity is trading at a lower price-to-earnings ratio than Parsons, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for Star Equity and Parsons, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Star Equity	2	0	1	1	2.25
Parsons	1	4	11	0	2.62

Star Equity presently has a consensus target price of $28.00, indicating a potential upside of 194.74%. Parsons has a consensus target price of $63.50, indicating a potential upside of 26.06%. Given Star Equity’s higher possible upside, research analysts clearly believe Star Equity is more favorable than Parsons.

Summary

Parsons beats Star Equity on 12 of the 15 factors compared between the two stocks.

About Star Equity

Star Equity Holdings, Inc. engages in the construction business in the United States and internationally. It operates through two segments: Construction, and Investments. It manufactures modular housing units, structural wall panels, permanent wood foundation systems, and other engineered wood products; supplies general contractors with building materials; holds real estate assets; and manages investments. The company was formerly known as Digirad Corporation and changed its name to Star Equity Holdings, Inc. in December 2020. Star Equity Holdings, Inc. was founded in 1985 and is headquartered in Old Greenwich, Connecticut.

About Parsons

Parsons Corporation provides integrated solutions and services in the defense, intelligence, and critical infrastructure markets in North America, the Middle East, and internationally. The company operates through Federal Solutions and Critical Infrastructure segments. The Federal Solutions segment provides critical technologies, such as cybersecurity; missile defense; intelligence; space launch and ground systems; space and weapon system resiliency; geospatial intelligence; signals intelligence; environmental remediation; border security, critical infrastructure protection; counter unmanned air systems; biometrics and bio surveillance solutions to U.S. Department of Defense, including military services; Missile Defense Agency, the Department of Energy; the Department of State; the Department of Homeland Security, and the Federal Aviation Administration. The Critical Infrastructure segment provides management, design, and engineering services, as well as offers leveraging sensor solutions. This segment develops digital solutions for next generation aviation, rail and transit, bridges, roads, and highways; and provides water and wastewater treatment systems; AI/ML, and digital twin and cyber systems integration services; planning, engineering, and management services for infrastructure, including bridges and tunnels, roads and highways, water and wastewater, and dams and reservoirs. Parsons Corporation was founded in 1944 and is headquartered in Chantilly, Virginia.