Defense electronics company Mercury Systems (MRCY +10.49%) reported a better-than-expected quarter, and management is confident the momentum can be sustained into the new fiscal year.
Investors are excited, sending Mercury shares up 22% as of 11 a.m. ET on Wednesday.
Turning a corner after a rough few years
Mercury manufactures sensors, communications equipment, and other electronics components for the aerospace and defense industries.
The stock has fallen considerably over the past five years due to supply chain issues and other operational concerns. But the most recent results suggest that Mercury is rising again.
It earned $0.23 per share in its fiscal fourth quarter, ending June 28, on sales of $248.6 million, easily topping Wall Street's forecasts of $0.01 per share on sales of $230 million. Revenue was flat year over year, but bookings totaled $284.4 million, meaning that Mercury booked more future business in the quarter than it billed.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $31.2 million, compared to $21.9 million for the fourth quarter of fiscal 2023. The total backlog of future business at the end of the quarter was $1.33 billion.
NASDAQ: MRCY
Key Data Points
Is Mercury Systems a buy?
The stock's pop is nice, but long-term holders will need a lot more quarters like this one to get back to breakeven. CEO Bill Ballhaus said the company is back on track.
"In fiscal 2024, we made considerable progress in addressing what we believe to be transient challenges in the business, and we enter fiscal 2025 confident in our strategic positioning as a leader in mission-critical processing at the edge and our ability to deliver predictable organic growth with expanding margins and robust free cash flow," Ballhaus said.
The company has spent the last few years winding down some of its more troubled product lines and streamlining operations.
There is more work to be done, but Mercury is well positioned to make further gains from here.
