Financial Comparison: Leonardo DRS (NASDAQ:DRS) versus Mercury Systems (NASDAQ:MRCY)

Leonardo DRS (NASDAQ:DRS) and Mercury Systems (NASDAQ:MRCY) are both aerospace companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.

Risk and Volatility

Leonardo DRS has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Insider and Institutional Ownership

18.8% of Leonardo DRS shares are owned by institutional investors. Comparatively, 96.0% of Mercury Systems shares are owned by institutional investors. 0.3% of Leonardo DRS shares are owned by company insiders. Comparatively, 1.4% of Mercury Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Leonardo DRS and Mercury Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leonardo DRS	7.85%	12.02%	7.59%
Mercury Systems	-1.46%	2.22%	1.32%

Analyst Ratings

This is a breakdown of current ratings and price targets for Leonardo DRS and Mercury Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leonardo DRS	0	4	3	1	2.63
Mercury Systems	2	3	3	2	2.50

Leonardo DRS presently has a consensus target price of $52.00, indicating a potential upside of 7.15%. Mercury Systems has a consensus target price of $91.00, indicating a potential downside of 24.36%. Given Leonardo DRS’s stronger consensus rating and higher probable upside, equities analysts clearly believe Leonardo DRS is more favorable than Mercury Systems.

Valuation and Earnings

This table compares Leonardo DRS and Mercury Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leonardo DRS	$3.65 billion	3.55	$278.00 million	$1.07	45.36
Mercury Systems	$912.02 million	7.92	-$37.90 million	($0.24)	-501.25

Leonardo DRS has higher revenue and earnings than Mercury Systems. Mercury Systems is trading at a lower price-to-earnings ratio than Leonardo DRS, indicating that it is currently the more affordable of the two stocks.

Summary

Leonardo DRS beats Mercury Systems on 9 of the 14 factors compared between the two stocks.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.

About Mercury Systems

Mercury Systems, Inc., a technology company, manufactures and sells components, products, modules, and subsystems for aerospace and defense industries in the United States, Europe, and the Asia Pacific. Its products and solutions are deployed in approximately 300 programs with 25 defense contractors and commercial aviation customers. The company offers components, including power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, monolithic microwave integrated circuits, and memory and storage devices; modules and sub-assemblies, such as embedded processing boards, switched fabrics and boards, digital receivers, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video boards; and integrated subsystems. It also designs and develops digital radio frequency memory units for various modern electronic warfare applications; radar environment simulation and test systems for defense and intelligence applications; and signals intelligence payloads and EO/IR technologies for small UAV platforms, as well as onboard UAV processor systems for real-time wide area motion imagery. The company was formerly known as Mercury Computer Systems, Inc. and changed its name to Mercury Systems, Inc. in November 2012. The company was incorporated in 1981 and is headquartered in Andover, Massachusetts.