Mercury Systems (NASDAQ: MRCY) and General Dynamics (NYSE:GD) are both mid-cap industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mercury Systems $408.59 million 6.08 $24.87 million $0.86 59.84
General Dynamics $31.35 billion 2.01 $2.96 billion $10.07 20.91

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

Risk & Volatility

Mercury Systems has a beta of 0.23, indicating that its stock price is 77% less volatile than the S&P 500. Comparatively, General Dynamics has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Mercury Systems and General Dynamics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercury Systems 0 2 5 0 2.71
General Dynamics 2 3 7 0 2.42

Mercury Systems presently has a consensus price target of $52.20, indicating a potential upside of 1.44%. General Dynamics has a consensus price target of $219.69, indicating a potential upside of 4.32%. Given General Dynamics’ higher probable upside, analysts plainly believe General Dynamics is more favorable than Mercury Systems.

Institutional and Insider Ownership

96.3% of Mercury Systems shares are held by institutional investors. Comparatively, 86.8% of General Dynamics shares are held by institutional investors. 3.5% of Mercury Systems shares are held by company insiders. Comparatively, 6.7% of General Dynamics shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

General Dynamics pays an annual dividend of $3.36 per share and has a dividend yield of 1.6%. Mercury Systems does not pay a dividend. General Dynamics pays out 33.4% of its earnings in the form of a dividend. Mercury Systems has raised its dividend for 20 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Mercury Systems 9.14% 6.51% 5.12%
General Dynamics 9.94% 27.98% 9.15%

Summary

General Dynamics beats Mercury Systems on 11 of the 17 factors compared between the two stocks.

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.

General Dynamics Company Profile

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

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