Mercury Systems (NASDAQ:MRCY) versus Leonardo DRS (NASDAQ:DRS) Head to Head Analysis

Mercury Systems (NASDAQ:MRCY) and Leonardo DRS (NASDAQ:DRS) are both aerospace companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Profitability

This table compares Mercury Systems and Leonardo DRS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury Systems	-1.46%	2.22%	1.32%
Leonardo DRS	7.85%	12.02%	7.59%

Risk and Volatility

Mercury Systems has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Leonardo DRS has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Insider & Institutional Ownership

96.0% of Mercury Systems shares are held by institutional investors. Comparatively, 18.8% of Leonardo DRS shares are held by institutional investors. 1.4% of Mercury Systems shares are held by company insiders. Comparatively, 0.3% of Leonardo DRS shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Mercury Systems and Leonardo DRS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury Systems	$966.95 million	7.07	-$37.90 million	($0.24)	-474.63
Leonardo DRS	$3.65 billion	3.37	$278.00 million	$1.07	43.07

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Mercury Systems and Leonardo DRS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury Systems	2	3	3	2	2.50
Leonardo DRS	0	3	3	1	2.71

Mercury Systems currently has a consensus price target of $91.00, suggesting a potential downside of 20.11%. Leonardo DRS has a consensus price target of $52.80, suggesting a potential upside of 14.58%. Given Leonardo DRS’s stronger consensus rating and higher possible upside, analysts plainly believe Leonardo DRS is more favorable than Mercury Systems.

Summary

Leonardo DRS beats Mercury Systems on 9 of the 14 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 Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.