A month has gone by since the last earnings report for Mercury Systems (MRCY). Shares have lost about 10.2% in that time frame, underperforming the S&P 500.

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

Mercury Systems Q4 Earnings & Revenues Beat Estimates

Mercury Systems reported fourth-quarter fiscal 2024 results, wherein both top and bottom lines beat the Zacks Consensus Estimate.

The aerospace and defense tech firm reported non-GAAP earnings of 23 cents per share against the Zacks Consensus Estimate of a loss of 7 cents. The bottom line surged 109.1% year over year.

Mercury Systems’ non-GAAP revenues decreased 1.8% to $248.6 million. The top line beat the consensus mark by 11.7%. 

The results reflected solid progress in each of the priority focus areas, with highlights that include retiring risk across remaining challenged programs and returning to pilot production on the common processing architecture area.

Q4 in Details

Mercury Systems’ total bookings were $284.4 million, yielding a book-to-bill ratio of 1.14 for the quarter.

MRCY’s total backlog as of Jun 28, 2024, was $1.33 billion, reflecting an increase of $185.9 million from the year-ago quarter’s reported figure. As of Jun 28, 2024, total backlog of $758.9 million represented orders expected to be recognized as revenues within the next 12 months.

Mercury Systems’ gross profit was $73.2 million, up 8.6% year over year. Moreover, its gross margin expanded 280 basis points (bps) to 29.5%.

Total operating expenses increased 6.4% to $81.18 million. As a percentage of revenues, operating expenses increased 250 bps to 32.7%.

The company reported an adjusted EBITDA of $31.16 million, up 42.1% year over year. The margin expanded 390 bps to 12.5%.

Balance Sheet & Cash Flow

As of Jun 28, 2024, MRCY’s cash and cash equivalents were $180.52 million compared with $142.6 million as of Mar 29, 2024. The long-term debt as of Jun 28, 2024, was $591.5 million.

Cash flows provided by operating activities in the fourth quarter of fiscal 2024 were $71.8 million compared with $12.6 million in the year-ago quarter. Free cash flow was $61.4 million for the fourth quarter of fiscal 2024 compared with $3.8 million in the year-ago period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.