What happened

Shares of Mercury Systems (NASDAQ:MRCY) soared 15.1% on Wednesday after the processing subsystems company announced strong fiscal second-quarter 2019 results and a promising strategic acquisition.

On the former, Mercury Systems' quarterly revenue climbed 34.9% year over year to $159.1 million, including $28.8 million in revenue from its previous acquisitions of Themis Computer and Germane Systems. That translated to adjusted (non-GAAP) earnings of $22.6 million, or $0.47 per share, up from $0.28 per share in the same year-ago period. Analysts, on average, were only expecting earnings of $0.42 per share on revenue of $154.3 million. 

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So what

Mercury achieved total bookings during the quarter of $173.2 million, for a healthy book-to-bill ratio -- a metric comparing the number of orders received to the number of orders filled -- of 1.09. The company also ended calendar 2018 with a total backlog of $522 million, up 38.7% from the same point a year ago, including $389.1 million representing orders expected to be shipped in the coming year.

What's more, Mercury announced its acquisition of Arizona-based GECO Avionics, a leader in designing and manufacturing "affordable safety-critical avionics and mission computing solutions," for $36.5 million in cash. GECO's products are deployed on military platforms including the AH-64 Apache attack helicopter and the KC-46A Pegasus widebody multirole tanker. This marked Mercury's fifth such acquisition in the C4I (command, control, communications, computers, and intelligence) market over the past two fiscal years.

"The acquisition of GECO complements our acquisitions of Creative Electronic Systems ("CES"), based in Geneva, Switzerland, and Richland Technologies ("RTL"), based in Duluth, GA," stated Mercury CEO Mark Aslett. "Combined, these three acquisitions significantly expand our footprint in mission computing and platform management."

Now what

For its third quarter of fiscal 2019, Mercury expects revenue in the range of $162.7 million to $167.7 million (including GECO), with adjusted earnings per share in the range of $0.43 to $0.46. The midpoints of both ranges sit comfortably above Wall Street's consensus estimates for earnings of $0.44 per share and revenue of $155.8 million. 

To be fair, it's unclear exactly how much GECO contributed to Mercury's strong top-line guidance, or whether the purchase is expected to be immediately accretive to earnings per share. But given the company's relative outperformance even before it struck its latest acquisition, it's no surprise to see Mercury Systems stock rising today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.