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

Mercury Systems (NASDAQ:MRCY) announced its earnings results on Tuesday. The technology company reported $0.52 EPS for the quarter, beating the consensus estimate of $0.30 by $0.22, FiscalAI reports. The business had revenue of $253.15 million for the quarter, compared to the consensus estimate of $245.00 million. Mercury Systems had a positive return on equity of 1.29% and a negative net margin of 3.02%. The company’s revenue was up 12.4% on a year-over-year basis. During the same period last year, the business 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 Trading Up 5.0%

Shares of MRCY opened at $83.58 on Wednesday. The company has a market capitalization of $5.09 billion, a P/E ratio of -167.16 and a beta of 0.98. Mercury Systems has a one year low of $64.37 and a one year high of $128.45. The company has a debt-to-equity ratio of 0.29, a quick ratio of 1.85 and a current ratio of 2.96. The stock has a 50-day moving average price of $80.11 and a 200 day moving average price of $90.99.

Insider Activity at Mercury Systems

In other news, EVP David Farnsworth sold 8,155 shares of the firm’s stock in a transaction that occurred 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 of the company’s stock, valued at approximately $12,496,519.49. This trade represents a 6.14% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO William Ballhaus sold 111,076 shares of Mercury Systems 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 completion of the sale, the chief executive officer owned 342,436 shares of the company’s stock, valued at approximately $29,833,024.32. This trade represents a 24.49% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last quarter, insiders have sold 452,186 shares of company stock valued at $41,933,170. Company insiders own 0.99% of the company’s stock.

Analysts Set New Price Targets

MRCY has been the subject of several recent research reports. Piper Sandler lowered their price objective on shares of Mercury Systems from $131.00 to $107.00 and set an “overweight” rating for the company in a research report on Friday, October 23rd. Wall Street Zen cut shares of Mercury Systems from a “buy” rating to a “hold” rating in a research report on Saturday, July 18th. Royal Bank Of Canada reduced their target price on shares of Mercury Systems from $120.00 to $105.00 and set an “outperform” rating on the stock in a research report on Wednesday, October 28th. Truist Financial raised their price target on shares of Mercury Systems from $109.00 to $120.00 and gave the company a “buy” rating in a report on Thursday, August 20th. Finally, Weiss Ratings lowered shares of Mercury Systems from a “sell (d)” rating to a “sell (d-)” rating in a report on Monday, September 28th. One investment analyst has rated the stock with a Strong Buy rating, six have given a Buy rating, four have issued a Hold rating and two have assigned a Sell rating to the company. According to MarketBeat, the stock presently has a consensus rating of “Hold” and an average price target of $107.90.

Key Headlines Impacting Mercury Systems

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

• Positive Sentiment: Mercury reported earnings of $0.52 per share, above estimates of roughly $0.28–$0.30 and up from $0.26 a year earlier. Revenue rose 12.4% year over year to $253.2 million, topping the $245 million estimate. Mercury Systems Reports First Quarter Results
• Positive Sentiment: The company raised its fiscal 2027 outlook; a separate report highlighted stronger defense orders. Higher guidance and demand could help underpin expectations for future growth. Mercury Systems Q1 Swings To Profit; Raises FY27 Outlook Mercury Systems beats estimates as defense orders surge
• Negative Sentiment: Despite the earnings beat, headlines reported that MRCY shares fell and cited broader defense-sector concerns. This suggests sector sentiment may be offsetting some of the positive company-specific news. Defense Sector Concerns Weigh on Mercury Systems Shares Mercury Systems falls despite earnings beat

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.