Mercury Systems, Inc. (NasdaqGS:MRCY) is scheduled to report Q1 earnings results after markets close for trading on November 3, 2020.
The company is expected to report earnings of $0.47/share on revenue of $200.3 million. The consensus earnings per share (EPS) of $0.47/share is based on a poll of 10 analysts and represents a growth in eps of 6.6% over the same quarter last year, when the company reported earnings of $0.44/share.
The revenue forecast of $200.3 million based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 13.0%. Last year the company reported $177.3 million in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $200.33 | $177.30 | 13.0% |
| EPS | $0.47 | $0.44 | 6.6% |
Earnings Call Trends
Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.
What are your expectations from Mercury Systems, Inc. for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q4, 2020 | $0.57 | $0.72 | 26.4% | Beat |
| Q3, 2020 | $0.52 | $0.60 | 14.6% | Beat |
| Q2, 2020 | $0.48 | $0.54 | 12.1% | Beat |
| Q1, 2020 | $0.41 | $0.44 | 8.0% | Beat |
| Q4, 2019 | $0.44 | $0.47 | 6.3% | Beat |
| Q3, 2019 | $0.45 | $0.50 | 10.8% | Beat |
| Q2, 2019 | $0.42 | $0.47 | 12.2% | Beat |
| Q1, 2019 | $0.35 | $0.39 | 11.8% | Beat |
In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 3, 2020, the stock price did not react much to the update.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| August 4, 2020 | $78.84 | $78.85 | 0.0% | Increase |
| April 28, 2020 | $84.91 | $92.80 | 9.3% | Increase |
| January 28, 2020 | $75.52 | $77.51 | 2.6% | Increase |
| October 29, 2019 | $72.30 | $71.03 | −1.8% | Decline |
The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.61, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.61 implies a 0.5% chance of earnings manipulation.
Fundamentals And Technical Analysis
Mercury Systems, Inc. is currently trading at $71.45/share, down −2.1% for the day. The company is trading at approximately 74.5% of its 52-week high of $96.29/share. The company’s stock price is down −9.4% since the last earnings report and down −6.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 45.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of 46.74 and a forward P/E multiple of 34.04.
Mercury Systems, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.89. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Reported Fiscal Period Key | FY2020.Q4 |
| Period End Date | July 3, 2020 |
| Stock Price (Current) | $71.45 |
| P/E Ratio | 46.7x |
| P/E Ratio (Fwd) | 34.0x |
| PEG Ratio | 0.8 |
| Total Debt / Total Capital | 1.8% |
| Levered Free Cash Flow | $71.89 million |
| EV / EBITDA | 26.3x |
Mercury Systems, Inc. is a mid-cap stock with a market capitalization of $4.089 billion and a total enterprise value of $3.934 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.
Mercury Systems, Inc., a technology company, manufactures and sells components, modules, and subsystems in the United States, Europe, and the Asia Pacific. The company’s products and solutions are deployed in approximately 300 programs with 25 defense prime contractors and commercial aviation customers. It 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 modules and boards, switch fabric boards, high speed input/output boards, digital receiver boards, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video processing, and Ethernet and input-output boards; and integrated subsystems. The company also designs, develops, and manufactures 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. In addition, it designs, markets and sells products intended to protect electronic systems that are critical to national security. The company serves the aerospace and defense electronics industries. The company was formerly known as Mercury Computer Systems, Inc. and changed its name to Mercury Systems, Inc. in November 2012. Mercury Systems, Inc. was founded in 1981 and is headquartered in Andover, Massachusetts.
