Mercury Systems (NASDAQ:MRCY) Announces Earnings Results

Mercury Systems (NASDAQ:MRCY) issued its quarterly earnings data on Tuesday. The technology company reported $0.37 earnings per share for the quarter, missing analysts’ consensus estimates of $0.38 by ($0.01), FiscalAI reports. Mercury Systems had a negative net margin of 3.02% and a positive return on equity of 1.29%. The business had revenue of $289.78 million for the quarter, compared to analyst estimates of $266.09 million. During the same quarter last year, the business earned $0.47 EPS. Mercury Systems’s revenue for the quarter was up 6.1% compared to the same quarter last year.

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

• Record bookings and backlog: Fourth-quarter bookings reached $660 million, up 93.1% year over year, with a 2.28 book-to-bill ratio and backlog exceeding $1.9 billion. Full-year bookings rose nearly 50%, providing improved visibility into fiscal 2027 and beyond.
• Higher fiscal 2027 growth outlook: Mercury expects revenue to approach $1.1 billion, representing growth approaching double digits, with adjusted EBITDA approaching $200 million, up nearly 30% year over year. Management also raised its longer-term organic growth target to the low double digits.
• Margin expansion remains on track: Fiscal 2026 adjusted EBITDA margin increased 217 basis points to 15.3%, and management expects margins to rise through fiscal 2027 as lower-margin legacy backlog is converted and operating leverage improves.
• Cash flow investment will temper near-term conversion: Fiscal 2027 free-cash-flow conversion is expected to be approximately 35%, below the 50% target, as the company invests in inventory, automation, facilities, and factory optimization. The first quarter is expected to have an unusually large cash outflow due primarily to advance material purchases.
• International deliveries remain a temporary headwind: International revenue declined about 15% as Mercury transitioned manufacturing to a contract manufacturer, although management expects delivery issues to improve over the next several quarters.

Mercury Systems Trading Down 3.6%

Shares of NASDAQ MRCY opened at $101.25 on Thursday. Mercury Systems has a 12-month low of $62.78 and a 12-month high of $128.45. The company has a market cap of $6.08 billion, a price-to-earnings ratio of -202.50 and a beta of 0.95. The company has a current ratio of 3.19, a quick ratio of 2.15 and a debt-to-equity ratio of 0.40. The stock’s 50 day simple moving average is $108.62 and its 200 day simple moving average is $94.87.

Mercury Systems News Roundup

Here are the key news stories impacting Mercury Systems this week:

• Positive Sentiment: Mercury reported record fourth-quarter bookings of approximately $660 million, up 93.1% year over year, producing a 2.28 book-to-bill ratio. Backlog exceeded $1.9 billion, up 38.4%, improving revenue visibility as production ramps. Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
• Positive Sentiment: Fourth-quarter revenue rose 6.1% to about $290 million, beating analysts’ roughly $266 million estimate. Analysts at RBC, Baird and Piper Sandler raised price targets and maintained positive ratings, citing expected low-double-digit growth and the company’s sizable backlog. Mercury Systems Q4 Earnings in Line, Revenues Top on Bookings
• Neutral Sentiment: Several executives, including CEO William Ballhaus and multiple EVPs, sold shares totaling roughly $4.7 million in transactions dated August 17–18. The filings state the sales were used to cover tax withholding obligations tied to vested equity awards, reducing their signaling value, although there were no reported insider purchases. Mercury Systems Insider Trading Filing
• Negative Sentiment: Adjusted EPS was $0.37, slightly below the $0.38 consensus and down from $0.47 a year earlier; GAAP EPS was only $0.01 versus $0.27. Adjusted EBITDA fell to $49 million from $51 million, while free cash flow declined to $29 million from $34 million, overshadowing the bookings and revenue performance. Mercury Systems Drops as EPS Miss Overshadows Record Bookings
• Negative Sentiment: A newly highlighted risk is exposure to semiconductor cost volatility: Mercury relies on advanced components while many contracts are fixed-price, potentially allowing input-cost increases to compress margins until pricing or supply-chain adjustments take effect. Mercury Systems Fixed-Price Contract Risk

Wall Street Analyst Weigh In

MRCY has been the subject of a number of recent analyst reports. JPMorgan Chase & Co. raised their price target on shares of Mercury Systems from $99.00 to $101.00 and gave the stock a “neutral” rating in a research report on Monday, July 13th. The Goldman Sachs Group boosted their price objective on Mercury Systems from $60.00 to $68.00 and gave the company a “sell” rating in a report on Monday, May 11th. Robert W. Baird upped their price objective on Mercury Systems from $120.00 to $130.00 and gave the company an “outperform” rating in a research note on Wednesday. Truist Financial raised Mercury Systems to a “strong-buy” rating in a report on Friday, May 1st. Finally, Wall Street Zen lowered Mercury Systems from a “buy” rating to a “hold” rating in a research report on Saturday, July 18th. Two research analysts have rated the stock with a Strong Buy rating, four have issued a Buy rating, four have given a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat.com, the stock currently has an average rating of “Moderate Buy” and an average target price of $106.80.

Insider Buying and Selling

In other news, EVP Steven Ratner sold 1,971 shares of the business’s stock in a transaction on Tuesday, August 18th. The shares were sold at an average price of $111.36, for a total transaction of $219,490.56. Following the completion of the transaction, the executive vice president owned 26,488 shares of the company’s stock, valued at approximately $2,949,703.68. The trade was a 6.93% decrease in their ownership of the stock. The sale was disclosed in a legal filing 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 24,144 shares of the company’s stock in a transaction dated Tuesday, August 18th. The stock was sold at an average price of $111.36, for a total transaction of $2,688,675.84. Following the transaction, the chief executive officer owned 277,009 shares of the company’s stock, valued at $30,847,722.24. This represents a 8.02% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders sold a total of 51,948 shares of company stock valued at $5,666,964 in the last three months. 1.40% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On Mercury Systems

Hedge funds and other institutional investors have recently made changes to their positions in the business. State Street Corp grew its holdings in Mercury Systems by 12.1% in the 4th quarter. State Street Corp now owns 3,423,600 shares of the technology company’s stock worth $249,957,000 after buying an additional 368,242 shares in the last quarter. Invesco Ltd. boosted its position in Mercury Systems by 25.1% during the 4th quarter. Invesco Ltd. now owns 1,910,742 shares of the technology company’s stock worth $139,503,000 after acquiring an additional 383,299 shares during the period. T. Rowe Price Investment Management Inc. grew its stake in shares of Mercury Systems by 1.4% in the fourth quarter. T. Rowe Price Investment Management Inc. now owns 1,542,851 shares of the technology company’s stock worth $112,644,000 after purchasing an additional 21,182 shares in the last quarter. Goldman Sachs Group Inc. increased its holdings in shares of Mercury Systems by 51.6% during the first quarter. Goldman Sachs Group Inc. now owns 855,441 shares of the technology company’s stock valued at $36,861,000 after purchasing an additional 290,989 shares during the period. Finally, Van ECK Associates Corp increased its holdings in shares of Mercury Systems by 0.6% during the fourth quarter. Van ECK Associates Corp now owns 725,387 shares of the technology company’s stock valued at $52,961,000 after purchasing an additional 4,531 shares during the period. 95.99% of the stock is currently owned by institutional investors and hedge funds.

About Mercury Systems

Mercury Systems, Inc (NASDAQ: MRCY) is a technology company that designs, manufactures and markets secure processing subsystems for aerospace and defense applications. The company’s products are built to address the stringent security, safety and reliability requirements of mission-critical programs, with a focus on radar, electronic warfare, intelligence and other sensor and processing functions. Mercury’s offerings encompass rugged embedded computing modules, high-performance radio frequency (RF) and microwave components, digital signal processing subsystems and secure networking solutions.

Since its origins in advanced signal processing, Mercury Systems has expanded its capabilities through a combination of internal development and targeted acquisitions.