Investors were playing offense with defense stock Parsons (NYSE: PSN) on Hump Day. They were drawn to the company because of a lucrative deal it’s signed in the Middle East, and ultimately pushed its stock more than 2% higher in value that day. This was more than sufficient to trounce the S&P 500‘s (SNPINDEX: ^GSPC) 0.1% bump up.
New work in the Middle East
On the heels of President Trump’s visit to the region, the White House announced that Parsons won no less than 30 projects in the small but wealthy Gulf nation of Qatar. These are collectively worth up to $97 billion, the administration said.
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After that, Parsons announced that it has also been awarded two contracts by Saudi Arabia’s King Salman International Airport Development Company (KSIADC) to expand the country’s King Salman International Airport.
The first contract is to supply the materials for, and develop, airport infrastructure such as runways and air control towers. The second is for “landside” assets such as tunnels, bridges, and a rail network.
Parsons didn’t provide the financial details of the KSIADC arrangement, but we can assume it’ll be lucrative. The airport, to be located in Riyadh, will boast six runways and be able to handle as many as 120 million passengers by 2030, according to Parsons. That number should rise steeply to 185 million by 2050.
Details wanting
While both pieces of news are almost indisputably positive for Parsons, the investor reaction might have been muted because the Trump administration has a reputation for exaggerating such deals. Shareholders also probably would have liked to get some financial figures for the Saudi Arabia arrangements.
Nevertheless, Parsons will have plenty of work going forward, and it should be paid handsomely in the process.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
