Contrasting Mercury Systems (NASDAQ:MRCY) & Embraer-Empresa Brasileira de Aeronautica (NYSE:EMBJ)

Mercury Systems (NASDAQ:MRCY) and Embraer-Empresa Brasileira de Aeronautica (NYSE:EMBJ) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Volatility and Risk

Mercury Systems has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, Embraer-Empresa Brasileira de Aeronautica has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Valuation and Earnings

This table compares Mercury Systems and Embraer-Empresa Brasileira de Aeronautica”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury Systems	$983.62 million	4.75	-$29.67 million	($0.50)	-153.42
Embraer-Empresa Brasileira de Aeronautica	$7.58 billion	1.71	$351.90 million	$2.47	29.09

Embraer-Empresa Brasileira de Aeronautica has higher revenue and earnings than Mercury Systems. Mercury Systems is trading at a lower price-to-earnings ratio than Embraer-Empresa Brasileira de Aeronautica, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Mercury Systems and Embraer-Empresa Brasileira de Aeronautica, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury Systems	2	4	5	2	2.54
Embraer-Empresa Brasileira de Aeronautica	0	0	4	1	3.20

Mercury Systems currently has a consensus target price of $112.80, suggesting a potential upside of 47.05%. Embraer-Empresa Brasileira de Aeronautica has a consensus target price of $85.00, suggesting a potential upside of 18.30%. Given Mercury Systems’ higher possible upside, equities research analysts clearly believe Mercury Systems is more favorable than Embraer-Empresa Brasileira de Aeronautica.

Profitability

This table compares Mercury Systems and Embraer-Empresa Brasileira de Aeronautica’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury Systems	-3.02%	1.29%	0.78%
Embraer-Empresa Brasileira de Aeronautica	5.35%	11.90%	3.51%

Institutional and Insider Ownership

96.0% of Mercury Systems shares are held by institutional investors. Comparatively, 34.6% of Embraer-Empresa Brasileira de Aeronautica shares are held by institutional investors. 1.0% of Mercury Systems shares are held by company insiders. Comparatively, 1.0% of Embraer-Empresa Brasileira de Aeronautica shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Embraer-Empresa Brasileira de Aeronautica beats Mercury Systems on 9 of the 15 factors compared between the two stocks.

About Mercury Systems

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 boards, switched fabrics and boards, digital receivers, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video 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. The company was incorporated in 1981 and is headquartered in Andover, Massachusetts.

About Embraer-Empresa Brasileira de Aeronautica

Embraer S.A. designs, develops, manufactures, and sells aircraft and systems in North America, Latin America, the Asia Pacific, Brazil, Europe, and internationally. The company operates through Commercial Aviation; Defense & Security; Executive Aviation; Services & Support; and Other segments. The Commercial Aviation segment designs, develops, manufactures, and sells commercial jets, as well as leases aircraft. The Defense & Security segment engages in the research, development, production, modification, and support for military defense and security aircraft; and offers a range of products and integrated solutions that include radars, special space systems, and cyber security solutions, as well as information and communications systems comprising command, control, communications, computer, intelligence, surveillance, and reconnaissance systems. The Executive Aviation segment develops, produces, and sells executive jets. This segment also leases Phenom family executive jets in the entry jet and light jet categories; and Praetor 500 and Praetor 600, disruptive executive jets in the midsize and super midsize categories. The Service & Support segment provides after-service solutions and support services; maintenance, repair, and overhaul services for commercial, executive, and defense aircraft; and aircraft components and engines. This segment also supplies steel and composite aviation structures to various aircraft manufacturers. The Other segment engages in the supply of fuel systems, structural parts, and mechanical and hydraulic systems; and production of agricultural crop-spraying aircraft. The company was formerly known as Embraer-Empresa Brasileira de Aeronáutica S.A. and changed its name to Embraer S.A. in November 2010. Embraer S.A. was incorporated in 1969 and is headquartered in São Paulo, Brazil.