A month has gone by since the last earnings report for Mercury Systems (MRCY Quick QuoteMRCY - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mercury Systems due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Mercury Systems Inc before we dive into how investors and analysts have reacted as of late.

Mercury Systems Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Mercury Systems reported adjusted earnings of 47 cents per share for the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 123.81%. The bottom line increased 104.3% year over year from 23 cents per share in the prior year quarter.

In the fourth quarter, MRCY reported revenues of $273.1 million, reflecting a 9.9% year-over-year increase and surpassing the Zacks Consensus Estimate by 12.99%. MRCY's earnings beat the Zacks Consensus Estimate in three out of the trailing four quarters.

MRCY's Q4 Revenue Details

Fourth quarter fiscal 2025 revenues were $273.1 million, compared to $248.6 million in the fourth quarter of fiscal 2024. Total bookings for the fourth quarter of fiscal 2025 were $341.5 million, yielding a book-to-bill ratio of 1.25 for the quarter. As a defense technology company focused on mission-critical processing systems, Mercury Systems operates primarily as a single segment business serving aerospace and defense markets.

MRCY's Q4 Operating Details

Fourth quarter fiscal 2025 adjusted EBITDA was $51.3 million, compared to $31.2 million for the fourth quarter of fiscal 2024. The adjusted EBITDA margin was 18.8%, representing a significant improvement of 620 basis points year-over-year. GAAP net income and diluted earnings per share for the fourth quarter of fiscal 2025 were $16.4 million, and $0.27, respectively, compared to GAAP net loss and loss per share of $10.8 million, and $0.19, respectively, for the fourth quarter of fiscal 2024.

Balance Sheet & Cash Flow

As of June 27, 2025, cash and cash equivalents totaled $309.1 million, which increased from $269.8 million as of March 28, 2025. The long-term debt was $591.5 million, unchanged from the prior quarter. In the reported quarter, cash flow from operations was $38.1 million compared with $71.8 million in the prior year quarter. In the fourth quarter of fiscal 2025, free cash flow was $34.0 million compared to $61.4 million for the fourth quarter of fiscal 2024.

MRCY Offers Positive Fiscal 2026 Guidance

The company expects fiscal 2026 revenue growth of low single digits, with the first half remaining relatively flat year over year and volumes increasing sequentially in the second half. The adjusted EBITDA margin is expected to approach mid-teens for fiscal 2026, starting with low double-digit margins in the first half, expanding through the year, with the fourth quarter projected to deliver the highest margins. MRCY expects to be free cash flow positive in fiscal 2026.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -81.82% due to these changes.

VGM Scores

Currently, Mercury Systems has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Mercury Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Mercury Systems is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Spirit Aerosystems (SPR Quick QuoteSPR - Free Report) , a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended June 2025 more than a month ago.

Spirit Aerosystems reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of +9.6%. EPS of -$3.34 for the same period compares with -$2.73 a year ago.

For the current quarter, Spirit Aerosystems is expected to post a loss of $0.37 per share, indicating a change of +87.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Spirit Aerosystems has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.