Mercury Computer Systems, Inc. (MRCY)

Mercury Computer Systems provides superior open, commercially developed, application-ready, multi-INT subsystems for the Intelligence, Surveillance and Reconnaissance (ISR) market. With more than 30 years of experience solving highly challenging computing problems in the defense industry, the company also provides unparalleled domain expertise in radar, EW/SIGINT, EO/IR, C4I and sonar applications.

Embedded computing subsystems have become the lifeblood of innovation. They essentially empower the systems at the root of some of the world’s most important industrial devices. Mercury Computer Systems delivers these high-performing communications subsystems based on a steadfast commitment to open-standard technology.

The company’s Services and Systems Integration team (SSI) partners with its customers to design and integrate signal and image processing subsystems that minimize program risk, maximize application portability and accelerate time to deployment. Throughout its history, Mercury has worked in concert with 26 prime contractors to successfully execute more than 300 deployments on programs such as Aegis, Global Hawk, JCREW, Patriot, Predator and SEWIP.

With $355.6 million in total assets, $162.8 million of which consists of cash and cash equivalents, Mercury Computer Systems has approximately $54.1 million in total liabilities. Currently four analysts recommend the stock as a “Strong Buy”, three call it a “Buy”, and three have issued a “Hold” recommendation. The average price target is currently $24.50, significantly higher than the current market price.

Key statistics (9/6/11):

Market cap: $386.39 Million
P/E Ratio: 18.3 versus industry average of 9.7
P/S Ratio: 1.73 versus industry average of 11.63
Price/Book Ratio: 1.26 versus industry average of 2.61

Gross Profit Margin: 56.8% versus industry average of 45.1%
Pre-Tax Margin: 11.6% versus industry average of -6.4%
Net Profit Margin: 8.1% versus industry average of -8.0%
Asset Turnover (Management Efficiency): 0.8 vs 0.7

Debt/Equity Ratio: 0.00 versus industry average of 0.26
Current Ratio: 6.6 versus industry average of 5.5
Return on Equity: 7.7% versus industry average of -1.6%
5-Year average ROE: 2.4% versus industry average of -2.2%