Education
About Us
Working with TipRanks
Follow Us
Mercury Systems Inc (MRCY)
NASDAQ:MRCY
Top Page
Mercury Systems
(NASDAQ:MRCY)
Select Model
Select Model
Rating:63Neutral
Price Target:
$71.00
▼(-6.30% Downside)
Mercury Systems' stock score is primarily influenced by its strong technical momentum, despite financial challenges and valuation concerns. The earnings call provided a positive outlook with record bookings and revenue growth, but uncertainties remain. The stock's overbought technical indicators and negative P/E ratio suggest caution.
Positive Factors
New Production Agreement
This agreement enhances Mercury Systems' market position in defense technologies, potentially leading to increased revenue and long-term growth through strategic partnerships in the aerospace sector.
Record Bookings and Backlog
Record bookings and backlog indicate strong demand for Mercury's products, providing a stable revenue base and supporting future growth in the aerospace and defense sectors.
Improved Margins and Cash Flow
Improved margins and cash flow reflect operational efficiency and financial health, enabling Mercury Systems to reinvest in innovation and maintain competitive advantage.
Negative Factors
Negative Profitability
Ongoing negative profitability challenges Mercury Systems' ability to sustain operations and invest in growth, potentially impacting long-term competitiveness and financial health.
Low Margin Backlog
Low-margin backlog affects Mercury Systems' profitability, limiting the potential for margin expansion and necessitating strategic shifts to higher-margin projects for better financial outcomes.
Challenges with Unbilled Receivables
Issues with unbilled receivables can hinder cash flow and revenue recognition, affecting Mercury Systems' financial stability and operational efficiency over the long term.
Mercury Systems (MRCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.54B
Dividend YieldN/A
Average Volume (3M)743.16K
Price to Earnings (P/E)―
Beta (1Y)0.79
Revenue Growth9.19%
EPS Growth72.88%
CountryUS
Employees2,364
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.47
Shares Outstanding59,915,670
10 Day Avg. Volume629,999
30 Day Avg. Volume743,163
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.78
Enterprise Value/Revenue3.87
Enterprise Value/Gross Profit13.86
Enterprise Value/Ebitda54.23
Forecast
1Y Price Target
$63.50Price Target Upside-16.19% Downside
Rating ConsensusHold
Number of Analyst Covering9
Mercury Systems Business Overview & Revenue Model
Company DescriptionMercury Systems, Inc. (MRCY) is a technology company focused on providing innovative solutions for the aerospace and defense industries. The company specializes in the design, development, and delivery of advanced electronic systems, including secure and rugged computing platforms, sensor processing, and data analytics. Mercury's core offerings serve a wide range of applications, such as military and commercial aircraft, spacecraft, and other defense systems, enabling customers to enhance mission effectiveness and operational performance.
How the Company Makes MoneyMercury Systems generates revenue primarily through the sale of its electronic systems and related services to government and commercial customers in the aerospace and defense sectors. Key revenue streams include product sales, which consist of hardware and software solutions, as well as engineering services, which support the customization and integration of its technologies into customer systems. Additionally, the company benefits from long-term contracts and partnerships with defense agencies and prime contractors, which provide a steady flow of revenue. Significant collaborations with other technology firms and defense contractors also contribute to its earnings by expanding its market reach and enhancing its product offerings.
Mercury Systems Earnings Call Summary
Earnings Call Date:Aug 11, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Nov 11, 2025
Earnings Call Sentiment Positive
The earnings call indicates strong financial performance with record bookings, revenue growth, improved margins, and positive cash flow. However, challenges remain with low-margin backlog and uncertainties in guidance for FY '26.Q4-2025 Updates
Positive Updates
Record Quarterly Bookings and Backlog
Mercury Systems achieved record quarterly bookings of $342 million and a book-to-bill ratio of 1.25, resulting in a record backlog of $1.4 billion.
Revenue Growth
Q4 revenue increased to $273 million, up 9.9% year-over-year. Full year revenue reached $912 million, up 9.2% from the previous year.
Improved Margins and Cash Flow
Q4 adjusted EBITDA was $51 million with a margin of 18.8%. Full year adjusted EBITDA was $119 million with a margin of 13.1%. Free cash flow for the year was a record $119 million.
Operational Efficiency
Operating expenses decreased approximately $20 million or 25% year-over-year, and net working capital was reduced by $90 million year-over-year.
Positive Free Cash Flow
Free cash flow in Q4 was $34 million, exceeding expectations of breakeven, driven by accelerated customer deliveries and cash receipts.
Negative Updates
Low Margin Backlog
The company still executes low-margin programs, impacting overall margin improvement, though progress is being made to replace these with higher-margin bookings.
No Specific FY '26 Guidance
While optimistic, Mercury Systems did not provide specific guidance for FY '26 due to uncertainties in accelerating deliveries and potential funding increases.
Challenges with Unbilled Receivables
Unbilled receivables continue to be a focus, impacting capacity allocation and revenue recognition.
Company Guidance
During the Mercury Systems Fourth Quarter Fiscal 2025 Conference Call, the company reported robust financial growth, highlighted by record quarterly bookings of $342 million and a book-to-bill ratio of 1.25, resulting in a record backlog of $1.4 billion. The Q4 revenue was $273 million, reflecting a 9.9% year-over-year increase, while full-year revenue reached $912 million, up 9.2% from the prior year. Adjusted EBITDA for Q4 was $51 million, with a margin of 18.8%, contributing to a full-year EBITDA of $119 million and a 13.1% margin. The company also achieved a record full-year free cash flow of $119 million, with Q4 contributing $34 million. The focus remains on four strategic priorities: performance excellence, organic growth, margin expansion, and improved free cash flow, with ongoing efforts to enhance program execution and optimize operational efficiencies.Mercury Systems Financial Statement Overview
Summary
Mercury Systems faces significant financial challenges, with negative profitability and declining cash flow metrics. While the debt level is moderate, the inability to generate positive returns and cash flow poses risks to financial stability. The company needs to address operational inefficiencies to improve its financial health.Income Statement
Mercury Systems has experienced fluctuating revenue growth with a slight increase of 2.77% in the most recent year. However, profitability metrics are concerning, with negative net profit margins and EBIT margins indicating ongoing operational challenges. The company has struggled to maintain positive earnings, reflecting in negative EBIT and EBITDA figures.45
Neutral
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio, suggesting manageable leverage. However, the negative return on equity indicates that the company is not generating sufficient returns on shareholders' investments. The equity ratio is not calculable due to negative total assets, which is a significant concern.55
Neutral
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth, with a negative trend in recent years. The operating cash flow to net income ratio is positive, indicating some ability to convert earnings into cash, but the overall cash flow position remains weak due to declining free cash flow.50
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 912.02M | 912.02M | 835.27M | 973.88M | 988.20M | 924.00M |
| Gross Profit | 254.49M | 254.49M | 195.90M | 316.73M | 394.96M | 385.19M |
| EBITDA | 65.03M | -19.63M | -66.23M | 73.95M | 163.89M | 163.28M |
| Net Income | -37.90M | -37.90M | -137.64M | -28.34M | 11.28M | 62.04M |
Balance Sheet | ||||||
| Total Assets | 2.43B | -10.52M | 2.38B | 2.39B | 2.30B | 1.96B |
| Cash, Cash Equivalents and Short-Term Investments | 309.10M | -3.58M | 180.52M | 71.56M | 65.65M | 113.84M |
| Total Debt | 644.24M | 644.24M | 654.08M | 588.73M | 532.63M | 281.53M |
| Total Liabilities | 961.30M | 961.30M | 906.13M | 824.68M | 766.31M | 470.99M |
| Stockholders Equity | 1.47B | 1.47B | 1.47B | 1.57B | 1.54B | 1.48B |
Cash Flow | ||||||
| Free Cash Flow | 119.05M | 138.85M | 26.09M | -60.05M | -46.52M | 51.65M |
| Operating Cash Flow | 138.85M | 138.85M | 60.38M | -21.25M | -18.87M | 97.25M |
| Investing Cash Flow | -13.50M | -13.50M | -34.29M | -38.56M | -274.32M | -416.89M |
| Financing Cash Flow | 1.41M | 1.41M | 82.68M | 65.43M | 245.75M | 206.23M |
Mercury Systems Technical Analysis
Positive
75.77
Price Trends
61.83
Positive
55.91
Positive
49.65
Positive
Market Momentum
3.74
Negative
72.76
Negative
83.82
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRCY, the sentiment is Positive. The current price of 75.77 is above the 20-day moving average (MA) of 70.35, above the 50-day MA of 61.83, and above the 200-day MA of 49.65, indicating a bullish trend. The MACD of 3.74 indicates Negative momentum. The RSI at 72.76 is Negative, neither overbought nor oversold. The STOCH value of 83.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | 6.23B | 30.34 | 10.89% | 0.59% | 4.77% | 4.50% | |
74 Outperform | 4.92B | 58.04 | 5.66% | 1.07% | 1.92% | -15.47% | |
63 Neutral | $4.54B | ― | -2.57% | ― | 9.19% | 72.88% | |
63 Neutral | 13.91B | -433.88 | 4.92% | ― | 44.04% | -129.81% | |
50 Neutral | 5.44B | 104.54 | 1.17% | ― | 0.00% | 0.00% | |
41 Neutral | 4.52B | -1.92 | 81.63% | ― | -2.60% | -94.76% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
MRCY
Mercury Systems
75.77
39.66
109.83%
AVAV
AeroVironment
278.55
74.05
36.21%
HXL
Hexcel
61.86
0.35
0.57%
MOG.A
Moog
196.38
-4.33
-2.16%
SPR
Spirit AeroSystems
38.53
5.05
15.08%
AMTM
Amentum Holdings, Inc.
22.35
-5.65
-20.18%
Mercury Systems Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Mercury Systems COO Departs for CEO Role Elsewhere
Neutral
Apr 1, 2025
On March 28, 2025, Charles R. Wells, IV, the Executive Vice President and Chief Operating Officer of Mercury Systems, announced his departure to assume a CEO role at a privately held company. Following his departure, William L. Ballhaus, the Chairman and CEO, will oversee business operations, while David E. Farnsworth, the Executive Vice President and CFO, will take on additional responsibilities, including leading a management operating system and overseeing technology investments. In recognition of his expanded role, Mr. Farnsworth will receive a restricted stock unit award valued at $1,000,000, with specific vesting terms tied to his continued service with the company.
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.