Arconic (NYSE: ARNC) and Mercury Systems (NASDAQ:MRCY) are both mid-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, profitability, risk, analyst recommendations, valuation, earnings and institutional ownership.
Arconic pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Mercury Systems does not pay a dividend. Arconic pays out -11.2% of its earnings in the form of a dividend.
This table compares Arconic and Mercury Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings for Arconic and Mercury Systems, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Arconic currently has a consensus price target of $30.00, suggesting a potential downside of 2.72%. Mercury Systems has a consensus price target of $52.20, suggesting a potential upside of 1.44%. Given Mercury Systems’ higher probable upside, analysts plainly believe Mercury Systems is more favorable than Arconic.
Volatility and Risk
Arconic has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500.
Insider and Institutional Ownership
74.6% of Arconic shares are owned by institutional investors. Comparatively, 96.3% of Mercury Systems shares are owned by institutional investors. 0.1% of Arconic shares are owned by insiders. Comparatively, 3.5% of Mercury Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Arconic and Mercury Systems’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Arconic||$12.39 billion||1.20||-$941.00 million||($2.15)||-14.34|
|Mercury Systems||$408.59 million||6.08||$24.87 million||$0.86||59.84|
Mercury Systems has lower revenue, but higher earnings than Arconic. Arconic is trading at a lower price-to-earnings ratio than Mercury Systems, indicating that it is currently the more affordable of the two stocks.
Mercury Systems beats Arconic on 9 of the 14 factors compared between the two stocks.
Arconic Inc., formerly Alcoa Inc., is engaged in lightweight metals engineering and manufacturing. The Company operates through three segments: Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions. Its multi-material products, which include aluminum, titanium and nickel, are used around the world in markets, such as aerospace, automotive, commercial transportation and packaging. The Global Rolled Products segment produces a range of aluminum sheet and plate products for the aerospace, automotive, commercial transportation, brazing and industrial markets. The Engineered Products and Solutions segment develops and manufactures products for the aerospace (commercial and defense), commercial transportation and power generation end markets. The Transportation and Construction Solutions segment produces products that are used in the non-residential building and construction and commercial transportation end markets.
About Mercury Systems
Mercury Systems, Inc. is a commercial provider of secure processing subsystems designed and made in the United States. The Company’s solutions support a range of defense and intelligence programs. Its technologies include embedded processing modules and subsystems, radio frequency (RF) and microwave multi-function assemblies, as well as subsystems, and RF and microwave components. It designs and builds RF and microwave components and subsystems for the electronic warfare (EW), signals intelligence (SIGINT) and other communications requirements and applications. It offers analyst services and systems engineering support, consulting, maintenance and other support, testing and installation. It designs, markets and sells software and middleware environments for the development and execution of signal and image processing applications on a range of heterogeneous and multi-computing platforms. It also offers solutions in mission computing, safety-critical avionics and platform management.
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