Mercury Systems (MRCY) AI Stock Analysis

• Market Cap: $4.19B
• Dividend Yield: N/A
• Average Volume (3M): 599.66K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.93
• 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: 646,274
• 30 Day Avg. Volume: 599,658
• 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: 16.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 1
• Revenue Forecast (FY): $952.21M

• Rating: 57 Neutral
• Price Target: $74.00 ▲(6.25% Upside)

Mercury Systems' overall stock score is primarily influenced by its financial challenges, including negative profitability and cash flow issues. However, the positive sentiment from the recent earnings call, highlighting strong revenue growth and margin expansion, provides some optimism. The technical indicators suggest a neutral trend, while the valuation remains unattractive due to the negative P/E ratio.

Positive Factors

Revenue Growth

The 10.2% year-over-year revenue growth indicates strong demand for Mercury's products and services, supporting long-term business expansion and market position.

Record Backlog

A record backlog of $1.4 billion ensures future revenue visibility and stability, allowing Mercury Systems to plan and invest in growth initiatives with confidence.

Margin Expansion

Margin expansion through operational efficiencies and favorable program mix enhances profitability, providing a stronger financial foundation for future investments.

Negative Factors

Negative Profitability

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

Free Cash Flow Challenges

Continued free cash flow challenges limit Mercury's financial flexibility, potentially impacting its ability to fund strategic initiatives and manage debt.

Litigation Expenses

Rising litigation expenses add to operational costs, potentially affecting Mercury's profitability and diverting resources from growth and innovation efforts.

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: Negative
• Last Price: 69.65
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 69.65 is below the 20-day moving average (MA) of 70.48, below the 50-day MA of 73.46, and above the 200-day MA of 59.88, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 42.13 is Neutral, neither overbought nor oversold. The STOCH value of 12.11 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	$7.12B	107.55	1.47%	―	―	―
HXL	73 Outperform	$5.93B	87.83	4.36%	0.93%	-0.37%	-34.97%
MOG.A	73 Outperform	$7.84B	33.80	12.09%	0.47%	7.11%	13.43%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
MRCY	57 Neutral	$4.19B	-123.71	-2.24%	―	8.63%	72.72%
AVAV	52 Neutral	$12.13B	-193.79	-2.64%	―	79.89%	-171.81%
SPR	51 Neutral	$4.23B	-1.63	―	―	-1.31%	-78.19%

Mercury Systems Corporate Events

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.

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.