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What Do Analysts Think About Mercury Systems, Inc.'s (NASDAQ:MRCY) Growth?

Simply Wall St

In March 2019, Mercury Systems, Inc. (NASDAQ:MRCY) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, as a 34% increase in profits is expected in the upcoming year, though this is evidently lower than the past 5-year average earnings growth of 42%. Presently, with latest-twelve-month earnings at US$41m, we should see this growing to US$55m by 2020. Below is a brief commentary on the longer term outlook the market has for Mercury Systems. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Mercury Systems

How will Mercury Systems perform in the near future?

Over the next three years, it seems the consensus view of the 7 analysts covering MRCY is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MRCY's earnings growth over these next few years.

NasdaqGS:MRCY Past and Future Earnings, July 24th 2019

By 2022, MRCY's earnings should reach US$73m, from current levels of US$41m, resulting in an annual growth rate of 18%. This leads to an EPS of $1.44 in the final year of projections relative to the current EPS of $0.88. Margins are currently sitting at 8.3%, which is expected to expand to 11% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Mercury Systems, I've put together three relevant aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Mercury Systems 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 Mercury Systems is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Mercury Systems? 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.