Mercury Systems (MRCY): Assessing Valuation After a 76% Year-to-Date Share Price Rebound

Simply Wall St.12-15 00:22

Mercury Systems stock in focus Mercury Systems (MRCY) has quietly staged a sharp recovery this year, with the stock up about 76% year to date and roughly 97% over the past year, drawing fresh investor...

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This suggests momentum is still building despite past volatility.\nIf Mercury's...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"MRCY":"Mercury Systems Inc","BK4187":"航天航空与国防"},"translate_title":"Mercury Systems(MRCY)：今年迄今股价反弹76%后评估估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MRCY":1.5},"content_text":"Mercury Systems stock in focus Mercury Systems (MRCY) has quietly staged a sharp recovery this year, with the stock up about 76% year to date and roughly 97% over the past year, drawing fresh investor attention. See our latest analysis for Mercury Systems. That surge reflects a clear shift in sentiment, with the recent 7 day share price return of 5.54% adding to a strong 1 year total shareholder return of 96.7%. This suggests momentum is still building despite past volatility. If Mercury's rebound has you rethinking the defense space, this could be a good moment to see what else is moving across aerospace and defense stocks. With the shares now hovering near analysts’ targets after a rapid rerating, investors face a key question: does Mercury still trade below its true potential, or is the recent rally already pricing in future growth? Most Popular Narrative: 13.4% Undervalued With a fair value estimate of $86 against a last close of $74.49, the leading narrative points to upside that depends heavily on execution and mix.  Ongoing operational improvements including automation, streamlined processes, and working capital reduction are driving operating leverage, and as low margin legacy backlog is replaced by new, higher margin contracts, this is expected to result in sequential margin expansion and improved earnings trajectory.  Read the complete narrative. Curious how modest top line assumptions can still justify a punchy earnings ramp and a rich future profit multiple for a defense contractor? The narrative leans on a sharp margin reset, a pivotal swing from losses to profitability, and a valuation framework that treats Mercury more like a high growth platform rather than a traditional hardware supplier. Want to see which specific growth and profitability milestones underpin that $86 fair value? Read on to unpack the full story behind these projections. Result: Fair Value of $86 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, sustained low-margin legacy contracts and unrepeatable revenue pull-forwards could cap margin expansion and derail the expected earnings ramp. Find out about the key risks to this Mercury Systems narrative. Another Lens On Valuation While the narrative points to 13.4% upside, our DCF model paints a colder picture. On that cash flow view, Mercury looks overvalued, with a fair value estimate of $46.33 versus the current $74.49. Which story do you trust more, the growth narrative or the cash flows? Look into how the SWS DCF model arrives at its fair value. MRCY Discounted Cash Flow as at Dec 2025 Build Your Own Mercury Systems Narrative If this view does not quite align with your own, or you would rather dive into the numbers yourself, you can build a tailored thesis in under three minutes: Do it your way. A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Mercury Systems. Looking for more investment ideas? If Mercury has sharpened your interest in what is moving markets, act now and uncover fresh opportunities before they run away from you.  Capitalize on fast movers by targeting early stage opportunities with strong balance sheets using these 3612 penny stocks with strong financials before they reach the mainstream. Position yourself at the frontier of innovation by screening for cutting edge businesses powering the next wave of automation and analytics through these 26 AI penny stocks. Lock in potential bargains by focusing on cash flow backed opportunities trading below intrinsic value via these 908 undervalued stocks based on cash flows.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTechNew: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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