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Mercury Systems, Inc. (NASDAQ:MRCY), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Mercury Systems’s outlook and value based on the most recent financial data to see if the opportunity still exists.
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What Is Mercury Systems Worth?
According to our valuation model, Mercury Systems seems to be fairly priced at around 10% below our intrinsic value, which means if you buy Mercury Systems today, you’d be paying a fair price for it. And if you believe the company’s true value is $52.47, then there’s not much of an upside to gain from mispricing. What's more, Mercury Systems’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Check out our latest analysis for Mercury Systems
Can we expect growth from Mercury Systems?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Mercury Systems' earnings over the next few years are expected to increase by 99%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? MRCY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on MRCY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.