Mercury Systems (NASDAQ:MRCY) Issues Quarterly Earnings Results, Beats Estimates By $0.21 EPS

Key Points

• Beat estimates: Mercury reported EPS of $0.27 vs. $0.06 expected and revenue of $235.8M (up 11.5% YoY), with strong bookings of $348.3M (1.48 book‑to‑bill), nearly $1.6B backlog and adjusted EBITDA of $36.1M (15.3% margin, +360 bps YoY).
• Raised guidance: Management lifted FY‑2026 expectations to revenue growth approaching mid‑single digits (from low single digits), now targets mid‑teens adjusted EBITDA for the year, expects Q4 free cash flow to be positive, and reiterates a long‑term low‑to‑mid‑20% EBITDA margin goal.
• Notable insider selling: Despite the results, insiders have sold significant stock recently (including Jana Partners’ 400,000‑share sale of $32.4M), with insiders selling 863,383 shares over the last 90 days.

Mercury Systems (NASDAQ:MRCY - Get Free Report) issued its quarterly earnings data on Tuesday. The technology company reported $0.27 earnings per share for the quarter, topping the consensus estimate of $0.06 by $0.21, FiscalAI reports. The company had revenue of $235.76 million during the quarter, compared to analyst estimates of $208.42 million. Mercury Systems had a positive return on equity of 1.28% and a negative net margin of 3.23%.The firm's revenue for the quarter was up 11.5% compared to the same quarter last year. During the same period in the prior year, the business posted $0.06 earnings per share.

Here are the key takeaways from Mercury Systems' conference call:

• Q3 results beat expectations with $348.3M bookings (1.48 book-to-bill), nearly $1.6B backlog, $235.8M revenue (+11.5% organic) and adjusted EBITDA of $36.1M (15.3% margin, +360 bps YoY).
• Management raised FY‑2026 guidance to revenue growth approaching mid‑single digits (from low single digits), full‑year adjusted EBITDA now expected in the mid‑teens, and expects Q4 Free Cash Flow to be positive while reiterating a long‑term target of low‑to‑mid‑20% EBITDA margins.
• Operational execution accelerated conversion of backlog (~$25M revenue, ~$15M adjusted EBITDA and ~$25M cash timing benefits tied to Q4), added 50k sq ft of automated Phoenix capacity for Common Processing Architecture programs, and closed an acquisition of a manufacturing process technology provider to support ramping programs.
• Balance‑sheet and working‑capital progress includes $332M cash, $259.7M net debt, Net Working Capital down ~4.1% YoY and a $150M revolver paydown, although Q3 showed a slight Free Cash Flow outflow (~$1.8–2M).
• Upside remains conditional — potential tailwinds from initiatives like Golden Dome, LTAMDS and FMS orders are not yet reflected in bookings or guidance and depend on customer funding allocations and prime‑level awards.

Mercury Systems Trading Up 5.6%

Shares of MRCY traded up $4.43 during midday trading on Tuesday, hitting $82.96. 1,011,950 shares of the stock were exchanged, compared to its average volume of 479,946. Mercury Systems has a 52-week low of $44.01 and a 52-week high of $103.84. The stock has a fifty day simple moving average of $81.16 and a 200 day simple moving average of $80.45. The firm has a market cap of $4.98 billion, a P/E ratio of -156.53, a P/E/G ratio of 7.61 and a beta of 0.83. The company has a debt-to-equity ratio of 0.41, a quick ratio of 2.04 and a current ratio of 2.96.

Insider Buying and Selling at Mercury Systems

In other news, EVP Stuart Kupinsky sold 2,287 shares of the firm's stock in a transaction on Tuesday, February 17th. The stock was sold at an average price of $83.56, for a total transaction of $191,101.72. Following the completion of the transaction, the executive vice president directly owned 68,010 shares in the company, valued at $5,682,915.60. This trade represents a 3.25% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available at the SEC website. Also, Director Jana Partners Management, Lp sold 400,000 shares of the firm's stock in a transaction on Monday, February 9th. The stock was sold at an average price of $81.00, for a total value of $32,400,000.00. Following the transaction, the director owned 4,566,675 shares of the company's stock, valued at approximately $369,900,675. This represents a 8.05% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Over the last 90 days, insiders sold 863,383 shares of company stock valued at $74,789,584. Corporate insiders own 1.40% of the company's stock.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently modified their holdings of the company. Mariner LLC purchased a new position in shares of Mercury Systems during the third quarter worth $270,000. Crossmark Global Holdings Inc. purchased a new position in shares of Mercury Systems during the third quarter worth $254,000. Cibc World Markets Corp acquired a new stake in shares of Mercury Systems in the fourth quarter valued at $252,000. Hsbc Holdings PLC acquired a new stake in shares of Mercury Systems in the fourth quarter valued at $248,000. Finally, Marex Group plc acquired a new stake in shares of Mercury Systems in the fourth quarter valued at $222,000. 95.99% of the stock is currently owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

Several brokerages recently weighed in on MRCY. The Goldman Sachs Group increased their price objective on Mercury Systems from $49.00 to $55.00 and gave the stock a "sell" rating in a research report on Tuesday, January 20th. Truist Financial upgraded Mercury Systems to a "strong-buy" rating in a research report on Friday. Jefferies Financial Group decreased their target price on shares of Mercury Systems from $85.00 to $80.00 and set a "hold" rating on the stock in a research report on Tuesday, April 7th. Royal Bank Of Canada reaffirmed an "outperform" rating and issued a $105.00 target price on shares of Mercury Systems in a research report on Wednesday, February 4th. Finally, Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Mercury Systems in a research report on Tuesday, April 21st. Two analysts have rated the stock with a Strong Buy rating, three have given a Buy rating, three have assigned a Hold rating and two have assigned a Sell rating to the company's stock. According to MarketBeat, the company currently has an average rating of "Moderate Buy" and an average target price of $86.33.

Mercury Systems Company Profile

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.

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