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

Profitability

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

Net Margins Return on Equity Return on Assets
Cubic -0.75% -1.66% -0.80%
Mercury Systems 9.14% 6.51% 5.12%

Dividends

Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.5%. Mercury Systems does not pay a dividend. Cubic pays out -65.9% of its earnings in the form of a dividend.

Insider and Institutional Ownership

90.6% of Cubic shares are held by institutional investors. Comparatively, 96.4% of Mercury Systems shares are held by institutional investors. 7.9% of Cubic shares are held by company insiders. Comparatively, 3.5% of Mercury Systems shares are held by company 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.

Volatility & Risk

Cubic has a beta of 1.1, indicating that its share price is 10% more 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.

Valuation and Earnings

This table compares Cubic and Mercury Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cubic $1.49 billion 1.10 -$11.20 million ($0.41) -146.34
Mercury Systems $408.59 million 6.06 $24.87 million $0.86 59.70

Mercury Systems has lower revenue, but higher earnings than Cubic. Cubic is trading at a lower price-to-earnings ratio than Mercury Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Cubic and Mercury Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cubic 0 1 5 0 2.83
Mercury Systems 0 2 5 0 2.71

Cubic currently has a consensus target price of $60.17, suggesting a potential upside of 0.28%. Mercury Systems has a consensus target price of $50.20, suggesting a potential downside of 2.22%. Given Cubic’s stronger consensus rating and higher probable upside, analysts plainly believe Cubic is more favorable than Mercury Systems.

Cubic Company Profile

Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.

Mercury Systems Company Profile

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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