MeritValue

MERCURY SYSTEMS INC

MRCYdata completeness 88%16 fiscal years on file
The thesis, from the filings

MERCURY SYSTEMS INC earns about -1% 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 $11.13 and $11.61 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 2021FY 2022FY 2023FY 2024FY 2025
Revenue$924M1$988.2M2$973.9M3$835.3M3$912M3
Net income$62M4$11.3M5−$28.3M6−$137.6M6−$37.9M6
Operating cash flow$97.2M7−$18.9M8−$21.3M9$60.4M9$138.9M9
Capital expenditure$45.6M10$27.7M11$38.8M12$34.3M12$19.8M12
Free cash flow (derived)$51.6M7−$46.5M8−$60.1M9$26.1M9$119M9
Total debt—————
Cash & equivalents$113.8M13$65.7M14$71.6M15$180.5M16$309.1M16
Diluted shares55.5M55.9M56.6M57.7M58.7M

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
$250.82
your share of equity
Profit it earned you last year
−$6.45
Free cash flow it threw off
$20.26
Debt you’d be carrying
—

10 shares is a claim on $250.82 of net worth that earned you −$6.45 and generated $20.26 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-1% avg · 5y
FY21 5%FY22 1%FY23 -1%FY24 -9%FY25 -1%

It earned about -1% 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 v0.1.0

The 2 estimate methods that apply put fair value between $11.13 and $11.61 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$11.13
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth0.0%
  • fcfBase$26.1M
DCF · Growth Exit 5Y
$11.61
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth0.0%
  • fcfBase$26.1M
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 years0.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $11.61
The three cases
Bear0.0%$11.61
Base0.0%$11.61
Bull5.0%$13.14

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

Default growth 0.0%= 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 2021-07-02 · accession 0001049521-23-000031 (Revenues)
  2. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (Revenues)
  3. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (Revenues)
  4. 10-K · period ending 2021-07-02 · accession 0001049521-23-000031 (NetIncomeLoss)
  5. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (NetIncomeLoss)
  6. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (NetIncomeLoss)
  7. 10-K · period ending 2021-07-02 · accession 0001049521-23-000031 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-07-02 · accession 0001049521-23-000031 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-07-01 · accession 0001049521-24-000029 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-06-30 · accession 0001049521-25-000024 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-07-02 · accession 0001049521-22-000046 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-07-01 · accession 0001049521-23-000031 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-06-30 · accession 0001049521-24-000029 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2024-06-28 · accession 0001049521-25-000024 (CashAndCashEquivalentsAtCarryingValue)