Head to Head Review: Acuity (NYSE:AYI) & Parsons (NYSE:PSN)

Acuity (NYSE:AYI) and Parsons (NYSE:PSN) are both mid-cap business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.

Institutional and Insider Ownership

98.2% of Acuity shares are held by institutional investors. Comparatively, 98.0% of Parsons shares are held by institutional investors. 2.9% of Acuity shares are held by insiders. Comparatively, 1.3% of Parsons shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Acuity has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Parsons has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Acuity and Parsons, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acuity	0	4	5	0	2.56
Parsons	0	6	9	0	2.60

Acuity presently has a consensus target price of $369.17, suggesting a potential upside of 19.96%. Parsons has a consensus target price of $76.92, suggesting a potential upside of 57.32%. Given Parsons’ stronger consensus rating and higher probable upside, analysts clearly believe Parsons is more favorable than Acuity.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Acuity	9.37%	20.74%	12.20%
Parsons	3.62%	11.52%	5.36%

Valuation and Earnings

This table compares Acuity and Parsons”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Acuity	$4.35 billion	2.15	$396.60 million	$13.64	22.56
Parsons	$6.36 billion	0.82	$241.14 million	$2.09	23.39

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

Summary

Acuity beats Parsons on 9 of the 14 factors compared between the two stocks.

About Acuity

Acuity Brands, Inc. provides lighting, lighting controls, building management system, location-aware applications in the United States and internationally. The company operates in two segments, Acuity Brands Lighting and Lighting Controls (ABL); and the Intelligent Spaces Group (ISG). The ABL segment provides commercial, architectural, and specialty lighting solutions, as well as lighting controls and components for various indoor and outdoor applications under the A-Light, Aculux, American Electric Lighting, Cyclone, Dark to Light, eldoLED, Eureka, Gotham, Healthcare Lighting, Holophane, Hydrel, Indy, IOTA, Juno, Lithonia Lighting, Luminaire LED, Luminis, Mark Architectural Lighting, nLight, OPTOTRONIC, Peerless, RELOCWiring Solutions, and Sensor Switch. This segment serves electrical distributors, retail home improvement centers, electric utilities, national accounts, original equipment manufacturers, digital retailers, lighting showrooms, and energy service companies. The ISG segment offers building management solutions, such as products for controlling heating, ventilation, air conditioning, lighting, shades, refrigeration, and building access that deliver end-to-end optimization of those building systems; and building management software that enhances building system management and automates labor intensive tasks. This segment serves system integrators, as well as retail stores, airports, and enterprise campuses. The company offers its products and solutions under the Atrius, Distech Controls, and KE2 Therm Solutions brands. Acuity Brands, Inc. was incorporated in 2001 and is headquartered in Atlanta, Georgia.

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.