Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5969
    -0.0036 (-0.60%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • OIL

    81.87
    +0.52 (+0.64%)
     
  • GOLD

    2,216.10
    +3.40 (+0.15%)
     

What's in the Cards for Mercury Systems (MRCY) in Q3 Earnings?

Mercury Systems MRCY is scheduled to report third-quarter fiscal 2023 results after market close on May 2.

The company’s earnings surpassed estimates twice in the trailing four quarters while missing the same on two occasions, the average beat being -4.8%.

For the fiscal third quarter, Mercury Systems projects revenues in the range of $255-$260 million ($257.5 million at the midpoint). The Zacks Consensus Estimate for revenues is pegged at $252.9 million, suggesting a year-over-year decrease of 0.6%.

The company anticipates non-GAAP earnings in the range of 32-42 cents per share. The Zacks Consensus Estimate stands at 35 cents per share, indicating a year-over-year decrease of approximately 38.6%.

ADVERTISEMENT

Our estimates for Mercury Systems’ third-quarter revenues and non-GAAP earnings stand at $251.4 million and 32 cents per share, respectively.

Let’s see how things have shaped up before the upcoming announcement.

Mercury Systems Inc Price and EPS Surprise

Mercury Systems Inc price-eps-surprise | Mercury Systems Inc Quote

Factors to Consider

Mercury Systems’ third-quarter performance is likely to have benefited from modernization in radar, electronic warfare and C4I. This is providing the company with new opportunities in weapon systems, space, avionics processing, and mission computing and embedded rugged services.

Robust revenue contributions from the newly acquired businesses are expected to have aided MRCY’s top line in the to-be-reported quarter. Mercury Systems’ acquired businesses (5% of the total revenues) — Avalex Technologies and Atlanta Micro — cumulatively contributed $13.3 million to second-quarter fiscal 2023 revenues.

Moreover, Mercury Systems' performance is expected to have benefited from its large pipeline of defense projects in the to-be-reported quarter. The company’s domain expertise in analog and digital integration helped it build a solid business relationship with defense prime contractors, thereby aiding it in winning new contracts.

In the second quarter of fiscal 2023, Mercury Systems’ total bookings were $270.3 million, resulting in a 1.18 book-to-bill ratio. The company ended the quarter with a backlog of $1.12 billion, up $164 million on a year-over-year basis. Within the next 12 months, products worth $765.5 million from this order backlog are expected to be shipped.

However, macroeconomic challenges-related modernization delays and customer execution issues are likely to have impacted the company’s revenues in the third quarter. Though Mercury Systems has been steadily winning federal contracts, these low-margin deals are likely to have affected its profitability in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Mercury Systems this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though MRCY carries a Zacks Rank #3 at present, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Skyworks Solutions SWKS, Garmin GRMN and Model N MODN have the right combination of elements to post an earnings beat in their upcoming releases.

Skyworks carries a Zacks Rank #3 and has an Earnings ESP of +0.15%. The company is scheduled to report second-quarter fiscal 2023 results on May 8. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 1.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Skyworks’ second-quarter earnings stands at $2.02 per share, implying a year-over-year decline of 23.2%. It is estimated to report revenues of $1.15 billion, which suggests a decrease of approximately 14% from the year-ago quarter.

Garmin is slated to report first-quarter 2023 results on May 3. The company has a Zacks Rank #3 and an Earnings ESP of +5.79% at present. Garmin’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being a negative 7.3%.

The Zacks Consensus Estimate for GRMN’s first-quarter earnings is pegged at $1.00 per share, suggesting a decline of 9.9% from the year-ago quarter’s earnings of $1.11. Garmin’s quarterly revenues are estimated to decline 7.9% year over year to $1.08 billion.

Model N carries a Zacks Rank #3 and has an Earnings ESP of +7.14%. The company is slated to report second-quarter fiscal 2023 results on May 9. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 40.8%.

The Zacks Consensus Estimate for MODN’s second-quarter earnings is pegged at 17 cents per share, indicating a year-over-year increase of 21.4%. The consensus mark for revenues stands at $59.4 million, suggesting a year-over-year increase of 11.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Garmin Ltd. (GRMN) : Free Stock Analysis Report

Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report

Model N, Inc. (MODN) : Free Stock Analysis Report

Mercury Systems Inc (MRCY) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research