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Mercury Systems
(NASDAQ:MRCY)
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Rating:59Neutral
Price Target:
$94.00
▲(7.13% Upside)
Action:Reiterated
Date:08/19/26
The score is driven primarily by an improving but still mixed financial profile (better revenue/margins, moderating leverage, positive recent free cash flow, but ongoing GAAP losses and negative ROE). The latest earnings call adds support via strong backlog/bookings and upbeat FY2027 EBITDA/revenue guidance, though tempered by near-term free-cash-flow conversion pressure from planned investments. Technicals are largely neutral, and valuation is a notable drag given the very negative P/E and no dividend yield support.
Positive Factors
Record backlog supports multiyear revenue visibility
Record bookings and backlog provide stronger multiyear demand visibility and support production revenue as defense platforms progress through development and procurement cycles.
Negative Factors
Persistent GAAP losses weaken earnings quality
Sustained GAAP losses and negative return on equity limit evidence of durable profitability, reduce the quality of reported earnings and could constrain flexibility if program execution weakens.
Read all positive and negative factors
Positive Factors
Negative Factors
Record backlog supports multiyear revenue visibility
Record bookings and backlog provide stronger multiyear demand visibility and support production revenue as defense platforms progress through development and procurement cycles.
Read all positive factors
Mercury Systems Key Performance Indicators (KPIs)
Any
Net Revenue by Geography
Reveals how much sales come from the U.S. versus international markets, indicating exposure to geopolitical risk, export controls, and regional defense spending trends. Greater geographic diversification can reduce dependence on any single government or procurement cycle.
Reveals how much sales come from the U.S. versus international markets, indicating exposure to geopolitical risk, export controls, and regional defense spending trends. Greater geographic diversification can reduce dependence on any single government or procurement cycle.
Data provided by:
The Fly
The FlyMercury Systems (MRCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.40B
Dividend YieldN/A
Average Volume (3M)738.94K
Price to Earnings (P/E)―
Beta (1Y)1.35
Revenue Growth7.85%
EPS Growth22.99%
CountryUS
Employees2,102
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)-0.50
Shares Outstanding60,136,130
10 Day Avg. Volume724,897
30 Day Avg. Volume738,944
Financial Highlights & Ratios
PEG Ratio10.94
Price to Book (P/B)5.01
Price to Sales (P/S)7.63
P/FCF Ratio110.22
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$115.38Price Target Upside31.50% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
EPS Forecast (FY)1.66
Revenue Forecast (FY)$1.08B
Mercury Systems Business Overview & Revenue Model
Company Description
Mercury Systems, Inc. is a technology firm dedicated to the creation and delivery of a wide range of advanced components, modules, and integrated subsystems, primarily catering to the aerospace and defense industries. The company's operations span...
How the Company Makes Money
Mercury Systems primarily makes money by selling advanced hardware and subsystem solutions to aerospace and defense customers, with revenue largely tied to U.S. Department of Defense and allied defense spending via prime contractors and, in some c...
Mercury Systems Earnings Call Summary
Earnings Call Date:Aug 18, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 10, 2026
Earnings Call Sentiment Positive
The call emphasized substantial operational momentum: record bookings, backlog and quarterly revenue, improved full-year adjusted EBITDA and margin expansion, broad-based demand (notably CPA), and raised growth targets for FY2027/FY2028. Offsetting these positives were weaker GAAP results, quarter-to-quarter adjusted EBITDA/margin softness, a meaningful drop in year-over-year free cash flow, temporary international delivery/ramp issues, and planned near-term investments that will depress FY2027 cash conversion. On balance the company presented strong demand and execution progress and provided a constructive outlook while flagging near-term cash and margin volatility tied to investments and backlog conversion dynamics.Positive Updates
Record bookings and backlog
Q4 bookings of $660M (up ~93.1% YoY) and record fiscal year bookings of ~$1.5B (up ~49.8% YoY). Total backlog over $1.9B (up ~38.4% YoY) and record next-12-month backlog of ~ $1.0B (up ~23.3% YoY). Q4 book-to-bill ~2.28 and FY book-to-bill 1.57, providing enhanced multiyear visibility.
Negative Updates
Decline in GAAP profitability and Q4 GAAP results
Q4 GAAP net income of ~$1M and EPS ~$0.01 vs prior-year Q4 GAAP net income ~$16M and EPS $0.27. Fiscal 2026 GAAP net loss approximately $30M (deterioration vs prior year). Management highlights non-GAAP improvements, but GAAP results remain a short-term weakness.
Read all updates
Q4-2026 Updates
Positive
Negative
Record bookings and backlog
Q4 bookings of $660M (up ~93.1% YoY) and record fiscal year bookings of ~$1.5B (up ~49.8% YoY). Total backlog over $1.9B (up ~38.4% YoY) and record next-12-month backlog of ~ $1.0B (up ~23.3% YoY). Q4 book-to-bill ~2.28 and FY book-to-bill 1.57, providing enhanced multiyear visibility.
Read all positive updates
Company Guidance
Mercury guided FY2027 revenue "approaching $1.1 billion," implying revenue growth approaching double digits year‑over‑year (with Q1 the low point and expected to be up high single digits y/y), and forecasted adjusted EBITDA approaching $200 million (nearly 30% y/y growth) with adjusted EBITDA margin in the high teens initially and rising through the year (Q1 margin roughly in line with Q1 FY26); management plans targeted investments in inventory, automation and factory optimization, expects FY27 free cash‑flow conversion to be beneath its 50% target (approaching ~35%) with a larger Q1 cash outflow and stronger FCF in H2, and cited the record backlog (> $1.9B) and ~$1.0B next‑12‑month backlog as the basis for increased visibility; longer‑term reference points for FY2028 call for low‑double‑digit organic growth, adjusted EBITDA margin at the low end of the company’s target (low‑to‑mid‑20s), and a return toward ~50% free‑cash‑flow conversion.Mercury Systems Financial Statement Overview
Summary
Income Statement
45
Neutral
Balance Sheet
68
Positive
Cash Flow
61
Positive
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 983.62M | 912.02M | 835.27M | 973.88M | 973.88M |
| Gross Profit | 242.26M | 254.49M | 195.90M | 316.73M | 316.73M |
| EBITDA | 93.63M | 65.03M | -66.23M | 73.95M | 73.95M |
| Net Income | -29.67M | -37.90M | -137.64M | -28.34M | -28.34M |
Balance Sheet | |||||
| Total Assets | 2.32B | 2.43B | 2.38B | 2.39B | 2.30B |
| Cash, Cash Equivalents and Short-Term Investments | 214.31M | 309.10M | 180.52M | 71.56M | 65.65M |
| Total Debt | 487.33M | 644.24M | 654.08M | 578.30M | 521.39M |
| Total Liabilities | 825.32M | 961.30M | 906.13M | 824.68M | 767.23M |
| Stockholders Equity | 1.50B | 1.47B | 1.47B | 1.57B | 1.54B |
Cash Flow | |||||
| Free Cash Flow | 68.09M | 119.05M | 119.05M | 26.09M | -60.05M |
| Operating Cash Flow | 102.39M | 138.85M | 138.85M | 60.38M | -21.25M |
| Investing Cash Flow | -35.72M | -13.50M | -13.50M | -34.29M | -38.56M |
| Financing Cash Flow | -162.74M | 1.41M | 1.41M | 82.68M | 65.43M |
Mercury Systems Technical Analysis
Negative
87.74
Price Trends
105.76
Negative
99.29
Negative
90.14
Negative
Market Momentum
-3.77
Positive
36.43
Neutral
6.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRCY, the sentiment is Negative. The current price of 87.74 is below the 20-day moving average (MA) of 102.96, below the 50-day MA of 105.76, and below the 200-day MA of 90.14, indicating a bearish trend. The MACD of -3.77 indicates Positive momentum. The RSI at 36.43 is Neutral, neither overbought nor oversold. The STOCH value of 6.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRCY.
Mercury Systems Risk Analysis
Mercury Systems disclosed 30 risk factors in its most recent earnings report. Mercury Systems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mercury Systems Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $12.17B | 32.18 | 18.00% | 0.29% | 15.65% | 78.52% | |
73 Outperform | $7.16B | 47.36 | 11.41% | 0.63% | 4.63% | 84.70% | |
72 Outperform | $5.04B | 24.61 | 4.44% | ― | 11.44% | 291.35% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $5.40B | -179.22 | -2.01% | ― | 7.85% | 22.99% | |
56 Neutral | $7.46B | -23.87 | -6.05% | ― | 140.89% | -448.13% |
* Industrials Sector Average
MRCY
Mercury Systems
90.47
21.97
32.07%
AVAV
AeroVironment
152.28
-96.65
-38.83%
HXL
Hexcel
94.71
31.27
49.29%
MOG.A
Moog
383.23
185.35
93.66%
AMTM
Amentum Holdings, Inc.
20.43
-4.82
-19.09%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.