Head-To-Head Analysis: Rolls-Royce Holdings PLC (OTCMKTS:RYCEY) versus Mercury Systems (NASDAQ:MRCY)

Mercury Systems (NASDAQ:MRCY) and Rolls-Royce Holdings PLC (OTCMKTS:RYCEY) are both aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Risk and Volatility

Mercury Systems has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Rolls-Royce Holdings PLC has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Mercury Systems and Rolls-Royce Holdings PLC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury Systems	2	3	3	2	2.50
Rolls-Royce Holdings PLC	0	1	4	1	3.00

Mercury Systems presently has a consensus price target of $91.00, indicating a potential downside of 20.11%. Given Mercury Systems’ higher possible upside, analysts clearly believe Mercury Systems is more favorable than Rolls-Royce Holdings PLC.

Valuation & Earnings

This table compares Mercury Systems and Rolls-Royce Holdings PLC”s top-line revenue, earnings per share (EPS) 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
Rolls-Royce Holdings PLC	$27.96 billion	5.61	$7.70 billion	N/A	N/A

Rolls-Royce Holdings PLC has higher revenue and earnings than Mercury Systems.

Profitability

This table compares Mercury Systems and Rolls-Royce Holdings PLC’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%
Rolls-Royce Holdings PLC	N/A	N/A	N/A

Insider and Institutional Ownership

96.0% of Mercury Systems shares are held by institutional investors. Comparatively, 0.1% of Rolls-Royce Holdings PLC shares are held by institutional investors. 1.4% of Mercury Systems shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Mercury Systems beats Rolls-Royce Holdings PLC on 7 of the 13 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 Rolls-Royce Holdings PLC

Rolls-Royce Holdings plc develops and delivers complex power and propulsion solutions for air, sea, and land in the United Kingdom and internationally. The company operates through four segments: Civil Aerospace, Defence, Power Systems, and New Markets. The Civil Aerospace segment develops, manufactures, markets, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services. The Defence segment is involved in the development, manufacture, marketing, and sale of military aero engines, naval engines, and submarine nuclear power plants, as well as offers aftermarket services. The Power Systems segment engages in the development, manufacture, marketing, and sale of integrated solutions for onsite power and propulsion under the mtu brand name. The New Markets segment develops, manufactures, and sells small modular reactor and new electrical power solutions. Rolls-Royce Holdings plc was founded in 1884 and is headquartered in London, the United Kingdom.