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How Do Analysts See Mercury Systems, Inc. (NASDAQ:MRCY) Performing Over The Next Few Years?

Simply Wall St

In July 2019, Mercury Systems, Inc. (NASDAQ:MRCY) released its latest earnings announcement, which confirmed that the business gained from a strong tailwind, eventuating to a double-digit earnings growth of 14%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Mercury Systems's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Mercury Systems

Analysts' outlook for this coming year seems positive, with earnings expanding by a significant 50%. This high growth in earnings is expected to continue, bringing the bottom line up to US$99m by 2022.

NasdaqGS:MRCY Past and Future Earnings, August 13th 2019

Although it is useful to be aware of the growth rate year by year relative to today’s figure, it may be more insightful estimating the rate at which the earnings are moving on average every year. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Mercury Systems's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 22%. This means that, we can assume Mercury Systems will grow its earnings by 22% every year for the next couple of years.

Next Steps:

For Mercury Systems, I've put together three relevant aspects you should look at:

  1. Valuation: What is MRCY worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MRCY is currently mispriced by the market.
  2. Future Earnings: How does MRCY's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MRCY? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.