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

AAR Corp. and Mercury Systems Inc are both Aerospace & Defense companies. AAR Corp. and Mercury Systems Inc are of similar size ($4.2B and $4.0B). Mercury Systems Inc has negative trailing earnings, so its P/E is not meaningful; AAR Corp. trades at 21.2×. 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 21.23 n/m 28.48
P/S 1.19 3.97 2.95
P/B 2.37 2.61 2.68
Price to free cash flow 22.38 57.33 31.70
EV/EBITDA 13.42 56.75 16.85
EV/Sales 1.41 4.21 2.74
Earnings yield 4.71% (0.75%) 0.89%
Free cash flow yield 4.47% 1.74% 0.00%

Profitability

Metric AIR MRCY Aerospace & Defense median
Gross margin 19.06% 28.58% 26.41%
Operating margin 8.17% 0.03% 3.69%
Net margin 5.55% (3.02%) 2.74%
Free cash flow margin 5.30% 6.92% 0.00%
Return on equity 12.93% (2.00%) 4.44%
Return on assets 6.09% (1.25%) 1.90%
Return on invested capital 7.10% 0.01% 0.26%

Growth

Metric AIR MRCY Aerospace & Defense median
Revenue growth (TTM) 21.97% 7.85% 18.03%
EPS growth (last fiscal year) 1,288.57% 23.08% 24.80%
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 0.20
Current ratio 2.83 2.96 2.85
Net debt to EBITDA 2.23 3.11 1.29

Dividend

Metric AIR MRCY Aerospace & Defense median
Dividend yield — — 0.91%
Payout ratio — — 0.30

Size

Metric AIR MRCY Aerospace & Defense median
Market cap 4.20b 3.99b 1.78b

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