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AAR Corp. (AIR) vs Mercury Systems Inc (MRCY)

AAR Corp. and Mercury Systems Inc are both Aerospace & Defense companies. Mercury Systems Inc is the larger, with a market value of $4.7B against $3.9B — 1.2× the size. Mercury Systems Inc has negative trailing earnings, so its P/E is not meaningful; AAR Corp. trades at 20.1×. AAR Corp. grew revenue faster over the last twelve months: 22.0% against 7.85%. AAR Corp. has the higher net margin (5.55% vs −3.02%) and the higher return on invested capital (7.10% vs 0.01%). Across the 21 metrics below, AAR Corp. leads on 17 and Mercury Systems Inc on 4.

Valuation

Metric AIR MRCY Aerospace & Defense median
P/E 20.08 n/m 31.81
P/S 1.12 4.49 3.55
P/B 2.25 2.95 2.59
Price to free cash flow 21.18 64.86 31.99
EV/EBITDA 12.81 63.78 18.08
EV/Sales 1.34 4.73 3.37
Earnings yield 4.98% (0.67%) 1.38%
Free cash flow yield 4.72% 1.54% 0.21%

Profitability

Metric AIR MRCY Aerospace & Defense median
Gross margin 19.06% 28.58% 25.48%
Operating margin 8.17% 0.03% 4.54%
Net margin 5.55% (3.02%) 2.22%
Free cash flow margin 5.30% 6.92% 1.43%
Return on equity 12.93% (2.00%) 6.43%
Return on assets 6.09% (1.25%) 2.70%
Return on invested capital 7.10% 0.01% 1.56%

Growth

Metric AIR MRCY Aerospace & Defense median
Revenue growth (TTM) 21.97% 7.85% 18.43%
EPS growth (last fiscal year) 1,288.57% 23.08% 24.27%
Revenue growth, 5-year CAGR 14.89% 1.26% 9.73%
Net income growth, 5-year CAGR 39.60% 0.00% 0.00%

Health

Metric AIR MRCY Aerospace & Defense median
Debt to equity 0.50 0.29 0.24
Current ratio 2.83 2.96 2.72
Net debt to EBITDA 2.23 3.11 1.12

Dividend

Metric AIR MRCY Aerospace & Defense median
Dividend yield — — 0.90%
Payout ratio — — 0.32

Size

Metric AIR MRCY Aerospace & Defense median
Market cap 3.94b 4.65b 2.19b

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