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MRCY, Mercury Systems Inc

Aerospace & Defense asset-light CyclicalSerial acquirer

Mercury Systems is a technology company that delivers mission-critical processing to the edge - where signals and data are collected - to solve the most pressing aerospace and defense challenges.

Mercury's products and solutions are deployed in more than 300 programs and across 35 countries.

Mercury Systems Inc is headquartered in Andover, Massachusetts, and has over 20 locations worldwide.

Latest annual: FY2025 10-K

MRCY · Mercury Systems Inc

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$912M

+9.2% YoY · 3% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $967M 5-yr avg $927M

Gross margin 29% 5-yr avg 33%

Operating margin 1.0% 5-yr avg −2.0%

Owner-earnings margin 8% 5-yr avg 2%

Free cash flow margin 8% 5-yr avg 2%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power. Serial acquirer. Goodwill and acquired intangibles are 47% of assets, with meaningful acquisition spending in 7 of the record's 10 years; much of what this business is was bought, at prices the record carries.
What moves the needle: Gross margin has run about 42% and operating margin about 8.8% through the cycle, a spread the cycle sets more than the company does. The margin is cyclical, swinging between −18% and 12% over the years, so the through-cycle figure carries more than any single year — and the balance sheet at the trough more than the peak. Inventory runs near 22% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. Read this kind of business on process leadership and the capex cycle. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median 4%, above 15% in 0 of 10 years). The steadier read is owner earnings: roughly 6% of revenue reaches owners as cash, though it swings. The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

18% of revenue comes from outside the United States.

Revenue by geography, FY2025

United States82%$746M
International18%$166M

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$270M	$409M	$493M	$655M	$797M	$924M	$988M	$974M	$835M	$912M	$967M	RevenueRevenue
47%	47%	46%	44%	45%	42%	40%	33%	23%	28%	29%	Gross marginGross mgn
20%	19%	18%	17%	17%	15%	16%	16%	20%	17%	17%	SG&A / revenueSG&A/rev
13%	13%	12%	11%	12%	12%	11%	11%	12%	7%	6%	R&D / revenueR&D/rev
$24M	$37M	$47M	$77M	$91M	$81M	$32M	($22M)	($148M)	($20M)	$9M	Operating incomeOp. inc.
8.9%	9.2%	9.5%	11.7%	11.4%	8.8%	3.2%	−2.2%	−17.7%	−2.2%	1.0%	Operating marginOp. mgn
$20M	$25M	$41M	$47M	$86M	$62M	$11M	($28M)	($138M)	($38M)	($14M)	Net incomeNet inc.
22%	20%	4%	21%	9%	20%	39%	—	—	—	—	Effective tax rateTax rate
											Cash flow & returns
$37M	$59M	$43M	$98M	$115M	$97M	($19M)	($21M)	$60M	$139M	$98M	Operating cash flowOp. cash
$16M	$32M	$42M	$46M	$49M	$67M	$93M	$97M	$88M	$82M	$75M	DepreciationDeprec.
($8M)	($13M)	($57M)	($15M)	($46M)	($60M)	($162M)	($118M)	$84M	$70M	$6M	Working capital & otherWC & other
$8M	$33M	$15M	$27M	$43M	$46M	$28M	$39M	$34M	$20M	$25M	CapexCapex
2.9%	8.0%	3.1%	4.1%	5.4%	4.9%	2.8%	4.0%	4.1%	2.2%	2.6%	Capex / revenueCapex/rev
$29M	$26M	$28M	$71M	$72M	$52M	($47M)	($60M)	$26M	$119M	$73M	Owner earningsOwner earn.
10.8%	6.4%	5.7%	10.8%	9.0%	5.6%	−4.7%	−6.2%	3.1%	13.1%	7.6%	Owner earnings marginOE mgn
$29M	$26M	$28M	$71M	$72M	$52M	($47M)	($60M)	$26M	$119M	$73M	Free cash flowFCF
10.8%	6.4%	5.7%	10.8%	9.0%	5.6%	−4.7%	−6.2%	3.1%	13.1%	7.6%	Free cash flow marginFCF mgn
$310M	$78M	$185M	$127M	$97M	$373M	$243M	$0	$0	$5M	$6M	AcquisitionsAcquis.
$8M	$9M	$16M	$8M	$16M	$66K	$8M	$63K	$31K	$0	—	BuybacksBuybacks
3%	4%	5%	6%	7%	4%	1%	-1%	-6%	-1%	—	ROICROIC
4%	3%	5%	4%	6%	4%	1%	-2%	-9%	-3%	-1%	Return on equityROE
4%	3%	5%	4%	6%	4%	1%	−2%	−9%	−3%	−1%	Retained to equityRetained/eq
											Balance sheet
$82M	$42M	$67M	$258M	$227M	$114M	$66M	$72M	$181M	$309M	$332M	Cash & investmentsCash+inv
$73M	$76M	$104M	$119M	$120M	$129M	$144M	$125M	$111M	$110M	$96M	ReceivablesReceiv.
$58M	$81M	$109M	$137M	$178M	$222M	$270M	$337M	$335M	$333M	$362M	InventoryInvent.
$27M	$27M	$21M	$39M	$42M	$48M	$99M	$104M	$81M	$79M	$104M	Accounts payablePayables
$105M	$130M	$191M	$217M	$257M	$302M	$316M	$358M	$366M	$363M	$353M	Operating working capitalOper. WC
$245M	$246M	$332M	$582M	$635M	$643M	$815M	$937M	$954M	$1.1B	$1.1B	Current assetsCur. assets
$68M	$73M	$72M	$98M	$126M	$151M	$194M	$233M	$234M	$300M	$350M	Current liabilitiesCur. liab.
3.6×	3.4×	4.6×	5.9×	5.0×	4.3×	4.2×	4.0×	4.1×	3.5×	3.2×	Current ratioCurr. ratio
$344M	$381M	$497M	$562M	$614M	$805M	$938M	$938M	$938M	$938M	$943M	GoodwillGoodwill
$736M	$816M	$1.1B	$1.4B	$1.6B	$2.0B	$2.3B	$2.4B	$2.4B	$2.4B	$2.5B	Total assetsAssets
$202M	$0	$195M	$0	$0	$200M	$512M	$577M	$592M	$592M	$592M	Total debtDebt
$121M	($42M)	$128M	($258M)	($227M)	$86M	$446M	$505M	$411M	$282M	$260M	Net debt / (cash)Net debt
20.5×	4.9×	16.5×	8.4×	90.5×	66.3×	5.4×	-0.9×	-4.2×	-0.6×	0.3×	Interest coverageInt. cov.
$473M	$725M	$772M	$1.3B	$1.4B	$1.5B	$1.5B	$1.6B	$1.5B	$1.5B	$1.5B	Shareholders’ equityEquity
3.5%	3.8%	3.5%	3.0%	3.3%	3.1%	3.9%	2.8%	3.1%	2.7%	3.3%	Stock comp / revenueSBC/rev
											Per share
35.1M	43.0M	47.5M	48.5M	55.1M	55.5M	55.9M	56.6M	57.7M	58.7M	59.4M	Shares out (diluted)Shares
$7.70	$9.50	$10.39	$13.50	$14.45	$16.66	$17.68	$17.22	$14.47	$15.52	$16.28	Revenue / shareRev/sh
$0.56	$0.58	$0.86	$0.96	$1.56	$1.12	$0.20	$-0.50	$-2.38	$-0.65	$-0.24	EPS (diluted)EPS
$0.83	$0.61	$0.59	$1.46	$1.30	$0.93	$-0.83	$-1.06	$0.45	$2.03	$1.24	Owner earnings / shareOE/sh
$0.83	$0.61	$0.59	$1.46	$1.30	$0.93	$-0.83	$-1.06	$0.45	$2.03	$1.24	Free cash flow / shareFCF/sh
$0.22	$0.76	$0.32	$0.55	$0.79	$0.82	$0.49	$0.69	$0.59	$0.34	$0.42	Cap. spending / shareCapex/sh
$13.48	$16.86	$16.26	$26.49	$25.13	$26.75	$27.50	$27.70	$25.51	$25.08	$24.88	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+8.1%/yr	+1.4%/yr
Owner earnings / share	+10.5%/yr	+9.2%/yr
Capital spending / share	+4.6%/yr	−15.6%/yr
Book value / share	+7.1%/yr	−0.0%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

59Mpeak FY2025

ROIC

−1%low FY2024

Gross margin

28%low FY2024

Net debt ÷ owner earnings

2.4×peak FY2024

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$119Mowner earningsvs.($38M)net incomelow FY2023

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned a $38M loss into $119M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	($38M)	($138M)	($28M)	$11M	$62M
Depreciation & amortizationnon-cash charge added back	+$82M	+$88M	+$97M	+$93M	+$67M
Stock-based compensationreal costnon-cash, but a real cost	+$25M	+$26M	+$28M	+$38M	+$28M
Working capital & othertiming of cash in and out, other non-cash items	+$70M	+$84M	−$118M	−$162M	−$60M
Cash from operations	$139M	$60M	($21M)	($19M)	$97M
Capital expenditurecash put back in to keep running and to grow	−$20M	−$34M	−$39M	−$28M	−$46M
Owner earnings	$119M	$26M	($60M)	($47M)	$52M
Owner-earnings marginowner earnings ÷ revenue	13%	3%	-6%	-5%	6%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $25M), owner earnings is nearer $94M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? -0.6×

Does not cover its interest

Operating income ($20M) ÷ interest expense $33M

What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
How heavy is the debt, net of cash? $282M

Net debt against an operating loss

Cash $309M − debt $592M

What this means
Netting $309M of cash and short-term investments against $592M of debt leaves $282M owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 185d

Long (60+ days)

DSO 44 + DIO 185 − DPO 44 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 3%

Below average through the cycle

10-yr median, range -6%–7%; -1% latest = NOPAT ($16M) ÷ invested capital $1.8B

Industry peers: median 11%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran -1% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 6%

Solid through the cycle

10-yr median margin, range -6%–13%; latest $119M = operating cash $139M − maintenance capex $20M

Industry peers: median 11%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 13% of revenue this year, a 6% median across 10 years. Treating stock comp as the real expense it is (less $25M of SBC) leaves $94M.
Are earnings backed by cash? $139M

Loss, but cash-generative

Net income ($38M) · cash from operations $139M

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

Where do the earnings go? 0%

Reinvests most of it

Dividends + buybacks $0 ÷ Owner Earnings $119M

What this means
Of $119M Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.24×

Harvesting

Capex $20M ÷ depreciation $82M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $912M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 3.52×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $592M vs $758M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 3 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Miss

Earnings +33% over the record · −338%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-1.13/share (latest year $-0.63), the averaged base the calculator's gate runs on, and book value is $24.54/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 7 of 10

What this means
Lost money in 3 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 0 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 9% → −7% (3-yr avg ends)

What this means
Through the cycle the operating margin slipped — about 9% early to −7% lately, median 9% — competition or costs are biting in.
Reinvestment, incremental ROIC −7%

What this means
Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.
Owner earnings growth +11%/yr

What this means
Owner earnings grew about 11% a year over the record.
Worst year 2024 · −17.7% op. margin

What this means
Operations went underwater in 2024, understand why before trusting the good years.
Share count +5.9%/yr

What this means
The share count is rising, dilution works against you on a per-share basis.
How management talks about it Promotional

What this means
The record is compounding, but the filing leans on a promoter’s vocabulary rather than the per-share, return-on-capital terms an owner uses. The results back the talk here; the register is still worth noting.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Framed as a capability

The filing positions AI as something the company uses, not something it fears.

“We maintain our technological edge by investing in critical capabilities and intellectual property ("IP" or "building blocks") in processing, leveraging open standards and open architectures to adapt quickly those building blocks into solutions for highly data-intensive applicati…”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat, and the company is using it that way.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 27, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.1B

Cash & short-term investments$332M
Receivables$96M
Inventory$362M
Other current assets$328M

Current liabilities$350M

Accounts payable$104M
Other current liabilities$246M

Current ratio3.19×all current assets ÷ what's due · Graham looked for 2×

Quick ratio2.15×stricter: inventory excluded

Cash ratio0.95×strictest: cash alone against what's due

Working capital$766Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+11.5%the freshest read on whether the business is still growing

Current ratio, recent quarters4.1× → 3.2×

Deeper floors

Tangible book value$350Mequity stripped of goodwill & intangibles

Net current asset value$113MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$253M$60M of it operating leases

Deferred revenue$126Mcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $608M of operating cash; how management split it reads as a cash builder, a large share of cash simply built up on the balance sheet.

Reinvested$292M · 48%
Buybacks$65M · 11%
Retained (debt / cash)$252M · 41%

Returned to owners$65M
20% of the owner earnings the business produced over the span, $0 as dividends and $65M as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt rose $389M and cash and short-term investments rose $250M.
Average price paid for buybacks—
Buybacks ran $65M over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count69.2%
The diluted count rose from 35M to 59M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Return on what it retained2%
Of the earnings it kept rather than paid out ($23M over the span), annual owner earnings (first three years vs last three) grew $506K, so each retained $1 added about 0.02 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$1.1B47% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity64%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$1.4Bover 10 years buying other businesses, against $292M of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Mark Aslett	$4.9M	$1.6M	$52M
2022	Mark Aslett	$18.9M	$22.8M	($47M)
2023	Mark Aslett	$837k	−$22.2M	($60M)
2023	William L. Ballhaus	$256k	$92k	($60M)
2024	William L. Ballhaus	$22.4M	$12.4M	$26M
2025	William L. Ballhaus	$10.2M	$29.9M	$119M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership1.4%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio91:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$25M
The slice of the business handed to employees in shares this year, 3% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Mercury Systems Inc is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

2 of the 6 tests turned up something to look into; the other 4 came back clean.

Look hereDid the share count rise anyway?69.2%
Diluted shares grew 69.2% over 2016–2025, even as the company spent $65M on buybacks. The repurchases were outrun by issuance — to staff, in a raise, or in a deal — and the filing says which; owners' slice still shrank. Read the buyback line beside this one, not on its own.
Look hereDid debt outgrow the business?$202M → $592M
Debt rose from $202M to $592M while owner earnings went from about $28M to $28M — about 7.3 years of owner earnings in debt then, about 21 now: measured against what the business earns, the balance sheet carries more debt than it did. Debt raised for buybacks or deals rather than growth is the kind that bites in a downturn.

And these came back clean

Is it less profitable than it was?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Inventory as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Aerospace & Defense

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MEIMethode Electronics Inc.	$1.0B	24%	10.1%	10%	6%
MTSIMACOM Technology Solutions Holdings Inc.	$967M	52%	11.7%	4%	20%
ICHRIchor Holdings	$948M	15%	5.2%	11%	4%
MRCYMercury Systems Inc	$912M	43%	8.8%	4%	6%
ALGMAllegro MicroSystems	$890M	55%	8.1%	13%	14%
ALABAstera Labs Inc.	$853M	75%	-27.4%	14%	11%
VREXVarex Imaging Corporation	$845M	33%	7.2%	6%	7%
OLEDUniversal Display Corporation	$651M	79%	37.9%	15%	33%
Group median	—	48%	8.5%	10%	9%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Mercury Systems Inc has delivered.

Mercury Systems Inc’s latest year runs above its own through-cycle margin — the reported figure may flatter a peak. So the tool opens on the through-cycle base, Graham’s averaging cutting both ways; clear the toggle below to read the latest year exactly as reported.

Today’s price $

Through the cycle, Mercury Systems Inc earns about $55M on its 6.1% median owner-earnings margin. This year’s 13.1% margin runs above that; the reported figure may flatter a peak you'd be paying on. Normalize, below, values the price on that through-cycle figure rather than the latest year. It comes pre-checked here for that reason, the same rule that already normalizes a trough; clear it to price the year as filed.

Base Normalize · through-cycle ($55M) Net of stock comp (−$32M) Steady-state · maintenance capex ($79M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+131%/yr

Owner-earnings growth · ’16→’25+11%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $73M on 60M shares outstanding, per the 10-Q cover, as of 2026-04-30; net debt $260M. The base opens on the through-cycle figure (the latest year sits above the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. Capex ($25M) runs well above depreciation ($75M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $79M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh MRCY against another business →

The owners of MRCY: the meeting and the votes →

Cite: Owner Scorecard, "Mercury Systems Inc (MRCY), the owner's record," https://ownerscorecard.com/c/MRCY, data as of 2026-07-09.

Manual order: ← MRAM its page in the Manual MREO →

Industry order: ← MOBBW the Aerospace & Defense chapter NN →