MeritValue

MERCURY SYSTEMS INC

MRCYdata completeness 88%17 fiscal years on file

Data notes: no data for concept 'investmentsAtFairValue'; no data for concept 'netInvestmentIncome'; no data for concept 'gainsOnRealEstateSales'; no data for concept 'realEstateImpairment'; no data for concept 'dividendsPaid'

The thesis, from the filings

MERCURY SYSTEMS INC earns about -2% on invested capital, below its ~9% cost of capital, but has diluted owners by 6% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $23.47 and $25.14 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2022FY 2023FY 2024FY 2025FY 2026
Revenue$988.2M1$973.9M2$835.3M3$912M3$983.6M3
Net income$11.3M4−$28.3M5−$137.6M6−$37.9M6−$29.7M6
Operating cash flow−$18.9M7−$21.3M8$60.4M9$138.9M9$102.4M9
Capital expenditure$27.7M10$38.8M11$34.3M12$19.8M12$34.3M12
Free cash flow (derived)−$46.5M7−$60.1M8$26.1M9$119M9$68.1M9
Total debt—————
Cash & equivalents$65.7M13$71.6M14$180.5M15$309.1M16$214.3M16
Diluted shares55.9M56.6M57.7M58.7M59.5M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$251.84
your share of equity
Profit it earned you last year
−$4.99
Free cash flow it threw off
$11.45
Debt you’d be carrying
—

10 shares is a claim on $251.84 of net worth that earned you −$4.99 and generated $11.45 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-2% avg · 5y
FY22 1%FY23 -1%FY24 -9%FY25 -1%FY26 0%

It earned about -2% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+6% shares · 5y

Share count is up 6% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.5.0

The 2 estimate methods that apply put fair value between $23.47 and $25.14 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$25.14
assumptions (10)
  • riskFreeRate4.8%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$68.1M
DCF · Growth Exit 5Y
$23.47
assumptions (10)
  • riskFreeRate4.8%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$68.1M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)9.08%
Terminal growth2.5%
At your growth, a share is worth $23.47
The three cases
Bear0.0%$19.61
Base5.0%$23.47
Bull10.0%$28.09

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (Revenues)
  2. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (Revenues)
  3. 10-K · period ending 2024-06-28 · accession 0001049521-26-000045 (Revenues)
  4. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (NetIncomeLoss)
  5. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (NetIncomeLoss)
  6. 10-K · period ending 2024-06-28 · accession 0001049521-26-000045 (NetIncomeLoss)
  7. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2024-06-28 · accession 0001049521-26-000045 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2024-06-28 · accession 0001049521-26-000045 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2022-07-01 · accession 0001049521-23-000031 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2023-06-30 · accession 0001049521-24-000029 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2024-06-28 · accession 0001049521-25-000024 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2025-06-27 · accession 0001049521-26-000045 (CashAndCashEquivalentsAtCarryingValue)