Analyzing Bae Systems (OTCMKTS:BAESY) and Mercury Systems (NASDAQ:MRCY)

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Bae Systems and Mercury Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bae Systems	0	3	3	0	2.50
Mercury Systems	2	3	3	2	2.50

Mercury Systems has a consensus price target of $89.89, suggesting a potential downside of 4.92%. Given Mercury Systems’ higher possible upside, analysts clearly believe Mercury Systems is more favorable than Bae Systems.

Institutional & Insider Ownership

0.2% of Bae Systems shares are owned by institutional investors. Comparatively, 96.0% of Mercury Systems shares are owned by institutional investors. 1.4% of Mercury Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Bae Systems has a beta of -0.08, suggesting that its stock price is 108% less volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Valuation and Earnings

This table compares Bae Systems and Mercury Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bae Systems	$37.36 billion	2.08	$2.72 billion	N/A	N/A
Mercury Systems	$912.02 million	6.22	-$37.90 million	($0.24)	-393.92

Bae Systems has higher revenue and earnings than Mercury Systems.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bae Systems	N/A	N/A	N/A
Mercury Systems	-1.46%	2.22%	1.32%

Summary

Mercury Systems beats Bae Systems on 8 of the 11 factors compared between the two stocks.

About Bae Systems

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance capabilities, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to protect nations, businesses, and citizens. The Platforms & Services segment manufactures, and upgrades combat vehicles, weapons, and munitions, as well as provides naval ship repair services and the management of government-owned ammunition plants. The Air segment develops future combat air systems and falconworks. The Maritime segment provides maritime and land activities, including submarine, ship build, and support programmes. BAE Systems plc was founded in 1970 and is headquartered in Camberley, the United Kingdom.

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.