MRCY Stock Surges 27% as Q4 Earnings and Revenue Beat Estimates

Mercury Systems MRCY shares jumped nearly 27% as the company's results for the fourth quarter of fiscal 2025 surpassed analyst expectations and improved year over year.

MRCY reported fourth-quarter fiscal 2025 non-GAAP earnings of 47 cents per share, which beat the Zacks Consensus Estimate by 123.81%. The bottom line grew 104.3% from the year-ago quarter’s earnings of 23 cents per share.

Mercury’s non-GAAP revenues increased 9.9% year over year to $273.1 million. The top line beat the consensus mark by 12.99%.

Mercury shares have outperformed the Zacks Aerospace sector and peers, including HEICO Corporation HEI and TransDigm Group Inc. TDG, year to date. MRCY shares have gained 61.2% year to date compared with the sector, whereas HEICO Corp. and TransDigm Group have grown by 32.9% and 11.3%, respectively.

MRCY's Q4 Operating Details

Mercury’s total bookings were $341.5 million, yielding a book-to-bill ratio of 1.25 for the reported quarter. The company’s total backlog as of June 27, 2025, was $1.40 billion, reflecting an increase of $79.2 million from the year-ago quarter. As of June 27, 2025, the total backlog of $807.8 million represented orders expected to be recognized as revenues within the next 12 months.

Mercury’s gross profit was $84.8 million, up 15.8% year over year. The company’s gross margin expanded 160 basis points (bps) year over year to 31%, driven by the average margin in its backlog.

Research and development (R&D) expenses decreased 38.6% year over year to $11.9 million. As a percentage of revenues, R&D expenses decreased 340 bps year over year to 4.4%.

Selling, general and administrative (SG&A) expenses decreased 13% year over year to $37.7 million. As a percentage of revenues, SG&A expenses contracted 360 bps year over year to 13.8%.

Total operating expenses decreased 24.6% year over year to $61.2 million. As a percentage of revenues, operating expenses decreased 1020 bps on a year-over-year basis to 22.4%.

Mercury reported an adjusted EBITDA of $51.3 million in the reported quarter, up 64.5% year over year, representing an adjusted EBITDA margin of 18.8%, which expanded 620 bps.

MRCY’s Balance Sheet & Cash Flow

As of June 27, 2025, MRCY’s cash and cash equivalents were $309.1 million compared with $269.8 million as of March 28, 2025. The long-term debt as of June 27, 2025, was $591.5 million, unchanged from the prior quarter.

Cash flows provided by operating activities in the fourth quarter of fiscal 2025 were $38.1 million compared with $30 million in the third quarter of fiscal 2025.

The free cash flow was $34 million for the fourth quarter of fiscal 2025 compared with $24.1 million in the third quarter of fiscal 2025.

MRCY’s FY26 Outlook

The company expects fiscal 2026 revenue growth of low single digits, with the first half remaining relatively flat year over year and volumes increasing sequentially in the second half.

The Zacks Consensus Estimate for the fiscal 2026 revenues is pegged at $930.99 million, indicating year-over-year growth of 5.72%. The consensus mark for earnings is pegged at 86 cents per share, down by a penny over the past 30 days. The figure indicates an increase of 119.78% from the year-ago quarter’s reported figure.

The adjusted EBITDA margin is expected to approach mid-teens for fiscal 2026, starting with low double-digit margins in the first half, expanding through the year, with the fourth quarter projected to deliver the highest margins.

MRCY expects to be free cash flow positive in fiscal 2026.

MRCY’s Zacks Rank & Stock to Consider

Currently, Mercury carries a Zacks Rank #4 (Sell).

A better-ranked stock from the broader sector is Sky Harbour Group SKYH, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Sky Harbour Group have dropped 7.9% year to date. SKYH is set to report second-quarter 2025 results on Aug. 12.

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This article originally published on Zacks Investment Research (zacks.com).

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