Mercury Systems (NASDAQ:MRCY) Releases Quarterly Earnings Results, Beats Expectations By $0.22 EPS

Mercury Systems (NASDAQ:MRCY) announced its quarterly earnings data on Tuesday. The technology company reported $0.52 EPS for the quarter, topping the consensus estimate of $0.30 by $0.22, FiscalAI reports. The company had revenue of $253.15 million during the quarter, compared to the consensus estimate of $245.00 million. Mercury Systems had a negative net margin of 0.40% and a positive return on equity of 2.55%. The company’s quarterly revenue was up 12.4% on a year-over-year basis. During the same quarter last year, the firm posted $0.26 EPS.

Here are the key takeaways from Mercury Systems’ conference call:

• Mercury reported record first-quarter bookings of $370 million, revenue of $253 million, and adjusted EBITDA of $56 million. Revenue grew 12.4% organically year over year, while adjusted EBITDA rose 58.6%.
• Record backlog reached $2.1 billion, up 44.7% year over year, with next-12-month backlog above $1 billion. Bookings strength spanned effectors, radar, electronic warfare, and space, though management said most potential demand tailwinds have not yet materialized.
• The company raised its FY2027 outlook to double-digit revenue growth, approaching $1.1 billion in revenue, and about $210 million in adjusted EBITDA, up roughly 40% year over year. It now expects free-cash-flow conversion to approach 40%, while noting the outlook excludes possible benefits from additional demand and automation.
• Adjusted EBITDA margin was 22.3%, supported by stronger backlog margins and favorable program mix; management said the quarter’s mix was somewhat favorable and expects it to normalize. First-quarter free cash flow was a $24 million outflow, largely due to planned inventory investment, although the company expects positive cash flow in Q2 and stronger cash flow in the second half.

Mercury Systems Price Performance

Shares of NASDAQ:MRCY opened at $88.33 on Thursday. The company has a quick ratio of 1.85, a current ratio of 2.96 and a debt-to-equity ratio of 0.29. Mercury Systems has a twelve month low of $64.37 and a twelve month high of $128.45. The stock’s 50 day moving average is $80.22 and its 200-day moving average is $90.94. The firm has a market capitalization of $5.38 billion, a price-to-earnings ratio of -1,104.12 and a beta of 0.98.

Insiders Place Their Bets

In other Mercury Systems news, EVP David E. Farnsworth sold 8,155 shares of the business’s stock in a transaction on Wednesday, August 19th. The shares were sold at an average price of $100.31, for a total transaction of $818,028.05. Following the completion of the sale, the executive vice president owned 124,579 shares in the company, valued at approximately $12,496,519.49. The trade was a 6.14% decrease in their position. The sale was disclosed in a document filed with the SEC, which can be accessed through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO William L. Ballhaus sold 111,076 shares of the company’s stock in a transaction on Tuesday, August 25th. The stock was sold at an average price of $87.12, for a total transaction of $9,676,941.12. Following the transaction, the chief executive officer owned 342,436 shares in the company, valued at approximately $29,833,024.32. The trade was a 24.49% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last quarter, insiders sold 452,186 shares of company stock worth $41,933,170. 0.99% of the stock is owned by company insiders.

Analyst Upgrades and Downgrades

Several research analysts recently issued reports on the stock. Weiss Ratings lowered shares of Mercury Systems from a “sell (d)” rating to a “sell (d-)” rating in a research note on Monday, September 28th. Deutsche Bank downgraded shares of Mercury Systems to a “hold” rating in a research note on Wednesday, August 12th. Canaccord Genuity Group lifted their price target on shares of Mercury Systems from $128.00 to $129.00 and gave the company a “buy” rating in a research note on Thursday. Piper Sandler reiterated an “overweight” rating and set a $107.00 price objective on shares of Mercury Systems in a report on Wednesday. Finally, Truist Financial increased their price objective on shares of Mercury Systems from $109.00 to $120.00 and gave the stock a “buy” rating in a research report on Thursday, August 20th. One research analyst has rated the stock with a Strong Buy rating, seven have issued a Buy rating, three have given a Hold rating and two have assigned a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus target price of $108.10.

Key Headlines Impacting Mercury Systems

Here are a few of the latest headlines about MRCY:

• Positive Sentiment: Orders and demand were strong: new bookings reached $370 million and backlog hit a record $2.1 billion, providing visibility into future work. RBC attributed the earnings beat and improved outlook in part to stronger gross margins. RBC on Mercury’s Q1 results
• Positive Sentiment: J.P. Morgan upgraded MRCY from Neutral to Overweight, citing strong orders and better profits. Piper Sandler maintained its Overweight rating. The upgrade may support investor confidence, although J.P. Morgan lowered its price target to $102 from $110. J.P. Morgan upgrade
• Negative Sentiment: Broader defense-sector concerns had weighed on the shares, and coverage noted the stock had fallen despite the earnings beat. Sector sentiment could temper the impact of Mercury’s company-specific results. Defense sector concerns weigh on Mercury Systems

About Mercury Systems

Mercury Systems, Inc. develops and supplies secure processing systems and subsystems for the aerospace and defense industries. Its products include embedded computing, signal processing, radio-frequency and microwave components, and other technologies used to process and manage critical data. The company’s technologies support applications such as radar, electronic warfare, communications, avionics, and command-and-control systems. Mercury works with defense contractors and government customers, providing components and systems designed for use in demanding environments.