Mercury Systems (NASDAQ:MRCY) Announces Earnings Results, Misses Expectations By $0.01 EPS

Mercury Systems (NASDAQ:MRCY) posted its quarterly earnings data on Tuesday. The technology company reported $0.37 earnings per share for the quarter, missing the consensus estimate of $0.38 by ($0.01), FiscalAI reports. Mercury Systems had a positive return on equity of 2.22% and a negative net margin of 1.46%.The business had revenue of $289.78 million during the quarter, compared to analysts’ expectations of $266.09 million. During the same period in the prior year, the firm posted $0.47 EPS. The firm’s revenue for the quarter was up 6.1% on a year-over-year basis.

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 Price Performance

Shares of NASDAQ:MRCY opened at $105.00 on Wednesday. The firm has a market capitalization of $6.30 billion, a PE ratio of -437.50 and a beta of 0.95. The company has a quick ratio of 2.15, a current ratio of 3.19 and a debt-to-equity ratio of 0.40. The company has a 50-day moving average price of $108.73 and a two-hundred day moving average price of $94.85. Mercury Systems has a twelve month low of $62.78 and a twelve month high of $128.45.

Insider Activity

In related news, Director Howard L. Lance sold 9,250 shares of the company’s stock in a transaction that occurred on Tuesday, May 26th. The shares were sold at an average price of $99.76, for a total transaction of $922,780.00. The sale was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. 1.40% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently bought and sold shares of MRCY. Kestra Advisory Services LLC purchased a new position in shares of Mercury Systems during the 4th quarter valued at $164,000. Smartleaf Asset Management LLC raised its position in shares of Mercury Systems by 622.1% in the fourth quarter. Smartleaf Asset Management LLC now owns 2,094 shares of the technology company’s stock worth $155,000 after buying an additional 1,804 shares in the last quarter. Cibc World Markets Corp purchased a new stake in shares of Mercury Systems in the fourth quarter worth $252,000. Marex Group plc bought a new stake in Mercury Systems during the fourth quarter valued at $222,000. Finally, CIBC Private Wealth Group LLC boosted its stake in Mercury Systems by 38.5% during the fourth quarter. CIBC Private Wealth Group LLC now owns 2,454 shares of the technology company’s stock valued at $179,000 after buying an additional 682 shares during the period. 95.99% of the stock is currently owned by hedge funds and other institutional investors.

Trending Headlines about Mercury Systems

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

• Positive Sentiment: Demand indicators were exceptionally strong. Fourth-quarter bookings reached a record $660 million, up 93.1% year over year, producing a 2.28 book-to-bill ratio. Backlog exceeded $1.9 billion, an increase of approximately 38.4%, supporting future revenue visibility. Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
• Positive Sentiment: Fourth-quarter revenue rose 6.1% to approximately $290 million, exceeding the roughly $266 million analyst estimate. Fiscal 2026 revenue increased to $984 million from $912 million, while the company indicated stronger organic growth expectations.
• Neutral Sentiment: Management reported fiscal 2026 adjusted EBITDA of $49 million for the quarter, a 16.7% margin, and $29 million of quarterly free cash flow. However, full-year operating and free cash flow were below fiscal 2025 levels, tempering the benefit of the strong order pipeline. Mercury Systems Q4 2026 Earnings Call Transcript
• Negative Sentiment: Profitability disappointed investors. Adjusted EPS was $0.37, below the $0.38 consensus cited by some data providers and down from $0.47 a year earlier. GAAP EPS fell to approximately $0.01 from $0.27, and fiscal 2026 ended with a $29.7 million GAAP net loss. The weaker earnings quality and lower cash generation appear to have driven the selloff despite record bookings. Mercury Systems drops as Q4 EPS miss overshadows record bookings

Analyst Upgrades and Downgrades

Several equities research analysts have recently issued reports on the company. Wall Street Zen lowered Mercury Systems from a “buy” rating to a “hold” rating in a research report on Saturday, July 18th. The Goldman Sachs Group increased their price target on shares of Mercury Systems from $60.00 to $68.00 and gave the company a “sell” rating in a research report on Monday, May 11th. Truist Financial upgraded shares of Mercury Systems to a “strong-buy” rating in a report on Friday, May 1st. Jefferies Financial Group reaffirmed a “hold” rating and issued a $115.00 price objective on shares of Mercury Systems in a research report on Friday, July 10th. Finally, Canaccord Genuity Group increased their target price on shares of Mercury Systems from $102.00 to $106.00 and gave the company a “buy” rating in a research report on Thursday, May 7th. Two research analysts have rated the stock with a Strong Buy rating, three have given a Buy rating, four have assigned a Hold rating and two have assigned a Sell rating to the company’s stock. Based on data from MarketBeat.com, the company currently has an average rating of “Hold” and a consensus price target of $102.00.

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.