Mercury Systems (MRCY) AI Stock Analysis

• Market Cap: $4.18B
• Dividend Yield: N/A
• Average Volume (3M): 618.40K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.94
• Revenue Growth: 8.63%
• EPS Growth: 72.72%
• Country: US
• Employees: 2,364
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.26
• Shares Outstanding: 60,100,136
• 10 Day Avg. Volume: 687,205
• 30 Day Avg. Volume: 618,403
• PEG Ratio: 1.14
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 3.44
• P/FCF Ratio: 26.36
• Enterprise Value/Market Cap: 1.17
• Enterprise Value/Revenue: 5.61
• Enterprise Value/Gross Profit: 20.54
• Enterprise Value/Ebitda: 190.80
• 1Y Price Target: $80.80
• Price Target Upside: 16.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 1
• Revenue Forecast (FY): $952.71M

• Rating: 52 Neutral
• Price Target: $69.00 ▼(-0.89% Downside)

Mercury Systems' overall stock score is primarily impacted by its financial challenges, including negative profitability and declining cash flow. However, the positive sentiment from the earnings call, with strong revenue growth and margin expansion, provides some optimism. The technical analysis and valuation further weigh down the score due to bearish indicators and a lack of profitability.

Positive Factors

Revenue Growth

The consistent revenue growth indicates strong demand for Mercury's products and services, reinforcing its market position in the aerospace and defense sectors.

Record Backlog

A record backlog reflects strong future demand and provides revenue visibility, supporting long-term growth and stability for Mercury Systems.

Margin Expansion

Improved margins indicate enhanced operational efficiency and cost management, which can lead to better profitability and competitive advantage.

Negative Factors

Negative Profitability

Ongoing negative profitability metrics suggest operational challenges, which could hinder Mercury's ability to invest in growth and innovation.

Declining Cash Flow

Declining cash flow can limit Mercury's ability to fund operations and strategic initiatives, impacting long-term financial health and flexibility.

Litigation Expenses

Increased litigation expenses add to operational costs, potentially diverting resources from growth initiatives and affecting financial performance.

Mercury Systems Business Overview & Revenue Model

Company Description

Mercury Systems, Inc., a technology company, manufactures and sells components, products, modules, and subsystems for aerospace and defense industries in the United States, Europe, and the Asia Pacific. Its products and solutions are deployed in approximately 300 programs with 25 defense contractors and commercial aviation customers. The company offers components, including power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, monolithic microwave integrated circuits, and memory and storage devices; modules and sub-assemblies, such as embedded processing modules and boards, switched fabric boards, digital receiver boards, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video processing, and Ethernet and input-output boards; and integrated subsystems. It also designs and develops digital radio frequency memory units for various modern electronic warfare applications; radar environment simulation and test systems for defense and intelligence applications; and signals intelligence payloads and EO/IR technologies for small UAV platforms, as well as onboard UAV processor systems for real-time wide area motion imagery. The company was formerly known as Mercury Computer Systems, Inc. and changed its name to Mercury Systems, Inc. in November 2012. Mercury Systems, Inc. was incorporated in 1981 and is headquartered in Andover, Massachusetts.

How the Company Makes Money

Mercury 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 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.

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.

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.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	871.05M	912.02M	835.27M	973.88M	973.88M	924.00M
Gross Profit	237.94M	254.49M	195.90M	316.73M	316.73M	385.19M
EBITDA	25.62M	65.03M	-66.23M	73.95M	73.95M	163.28M
Net Income	-68.43M	-37.90M	-137.64M	-28.34M	-28.34M	62.04M
Balance Sheet
Total Assets	2.46B	2.43B	2.38B	2.39B	2.30B	1.96B
Cash, Cash Equivalents and Short-Term Investments	304.72M	309.10M	180.52M	71.56M	65.65M	113.84M
Total Debt	645.13M	644.24M	654.08M	578.30M	521.39M	281.53M
Total Liabilities	982.58M	961.30M	906.13M	824.68M	767.23M	470.99M
Stockholders Equity	1.48B	1.47B	1.47B	1.57B	1.54B	1.48B
Cash Flow
Free Cash Flow	164.00M	119.05M	119.05M	26.09M	-60.05M	-46.52M
Operating Cash Flow	183.49M	138.85M	138.85M	60.38M	-21.25M	-18.87M
Investing Cash Flow	-10.48M	-13.50M	-13.50M	-34.29M	-38.56M	-274.32M
Financing Cash Flow	3.66M	1.41M	1.41M	82.68M	65.43M	245.75M

Mercury Systems Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 69.62
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 69.62 is below the 20-day moving average (MA) of 72.00, below the 50-day MA of 75.64, and above the 200-day MA of 57.81, indicating a neutral trend. The MACD of -2.32 indicates Positive momentum. The RSI at 42.60 is Neutral, neither overbought nor oversold. The STOCH value of 43.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MRCY.

Mercury Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AMTM	74 Outperform	$7.14B	107.99	1.47%	―	―	―
MOG.A	72 Outperform	$7.23B	31.10	12.09%	0.58%	7.11%	13.43%
HXL	66 Neutral	$6.07B	89.83	4.36%	0.89%	-0.37%	-34.97%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
AVAV	58 Neutral	$13.94B	―	-1.70%	―	44.04%	-129.81%
MRCY	52 Neutral	$4.18B	―	-2.24%	―	8.63%	72.72%
SPR	41 Neutral	$4.23B	-1.63	―	―	-1.31%	-78.19%

Mercury Systems Corporate Events

Mercury Systems Faces Operational and Financial Strain Amid Prolonged U.S. Government Shutdown

Mercury Systems faces significant operational and financial risks due to the ongoing U.S. federal government shutdown that started on October 1, 2025. The shutdown has led to potential delays or reductions in customer orders from the U.S. Department of Defense and prime contractors, as well as possible suspensions of current contracts and payment delays. Additionally, the slowdown in export license processing by key government agencies could impede Mercury Systems’ ability to fulfill international orders, risking increased costs from penalties for late deliveries. With no clear resolution in sight, the prolonged shutdown could severely impact the company’s operational results and financial performance.

Mercury Systems’ Earnings Call Highlights Growth and Challenges

Mercury Systems’ recent earnings call exuded a positive sentiment, underscoring strong revenue growth, margin expansion, and a record backlog. Despite facing challenges with free cash flow and the impact of accelerated deliveries, the company’s strategic initiatives are driving stronger financial performance and operational efficiencies.

Mercury Systems Reports Strong Q1 FY26 Performance

Mercury Systems is a global technology company specializing in delivering mission-critical processing power for aerospace and defense missions. The company is known for its innovative solutions that enhance decision-making capabilities in challenging environments.

Mercury Systems Amends Credit Agreement, Extends Facility

On November 4, 2025, Mercury Systems announced the amendment of its credit agreement, extending the maturity date of its revolving credit facility to November 4, 2030, with a borrowing capacity of $850 million. This amendment includes several financial adjustments, such as increasing the unrestricted cash netted from leverage ratio calculations and updating financial covenants. Additionally, the company reported strong first-quarter fiscal 2026 results, with a 10.2% increase in revenue to $225.2 million and a record backlog of $1.4 billion. Despite a GAAP net loss of $12.5 million, adjusted EBITDA rose by 66% year-over-year. The board also authorized a $200 million share repurchase program.

The most recent analyst rating on (MRCY) stock is a Hold with a $82.00 price target. To see the full list of analyst forecasts on Mercury Systems stock, see the MRCY Stock Forecast page.

Mercury Systems Elects New Board Chairman and Directors

At the Company’s Annual Meeting of Shareholders on October 22, 2025, Mercury Systems elected William L. Ballhaus, Lisa S. Disbrow, and Howard L. Lance as Class I Directors for a three-year term ending in 2028, and Jean Bua as a Class II Director for a one-year term ending in 2026. The meeting also approved the compensation of the company’s named executive officers, the 2025 Long Term Incentive Plan, and the appointment of KPMG LLP as the independent registered public accounting firm for fiscal 2026. Additionally, William L. Ballhaus was elected Chairman of the Board, and Barry R. Nearhos was appointed as Lead Independent Director, with the Board committees’ composition determined for the upcoming year.

The most recent analyst rating on (MRCY) stock is a Hold with a $82.00 price target. To see the full list of analyst forecasts on Mercury Systems stock, see the MRCY Stock Forecast page.

Mercury Systems Reports Strong Earnings Amid Challenges

The recent earnings call for Mercury Systems showcased a strong financial performance, highlighting record bookings, revenue growth, improved margins, and positive cash flow. Despite these achievements, the company faces challenges with a low-margin backlog and uncertainties in guidance for fiscal year 2026.