Mercury Systems (MRCY) Reports Q2: Everything You Need to Know Before Earnings Announcement

Aerospace and defense company Mercury Systems (NASDAQGS:MRCY) is set to report results tomorrow after the market opens. Here’s what to watch for.

Mercury Systems missed analysts’ revenue expectations by 2.9% in its latest quarter, posting revenue of $208.3 million, down 21% year over year. It was a weak quarter for the company, which missed analysts’ estimates for both organic earnings and revenue.

Is Mercury Systems a buy or sell on earnings? Read our full analysis here, it’s free.

Analysts are expecting Mercury Systems revenue to decline 9% year over year to $230.5 million for the quarter, an improvement from the 12.6% decline seen in the same quarter last year. Adjusted loss is expected to be -$0.04 per share.

Most analysts covering the company have reaffirmed their estimates over the past 30 days, suggesting they expect the company to maintain its course toward earnings. Mercury Systems has missed Wall Street revenue estimates six times over the past two years.

Looking at Mercury Systems’ competitors in the defense contractor space, some have already reported second-quarter results, which gives us a hint of what to expect. Leonardo DRS reported year-over-year revenue growth of 19.9%, beating analyst expectations by 10.7%, and Huntington Ingalls reported revenue growth of 6.8%, beating estimates by 4.7%. Leonardo DRS’s share price was flat after the results, while Huntington Ingalls fell 5.9%.

Read our full analysis of Leonardo DRS results here and Huntington Ingalls results here.

Growth stocks have seen increased volatility as investors debate the Fed’s monetary policy, and while some defense contractor stocks have fared slightly better, they haven’t been spared, with shares down an average of 5.4% over the past month. Mercury Systems is up 8.9% in the same time frame and is heading for earnings with an average analyst price target of $25.8 (up from the current share price of $35.31).

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