Mercury Systems (NASDAQ:MRCY) and American Defense Systems (OTCMKTS:ADFS) Financial Analysis

American Defense Systems (OTCMKTS:ADFS) and Mercury Systems (NASDAQ:MRCY) are both aerospace companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for American Defense Systems and Mercury Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Defense Systems	0	0	0	0	0.00
Mercury Systems	2	2	4	2	2.60

Mercury Systems has a consensus price target of $81.00, suggesting a potential upside of 17.71%. Given Mercury Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Mercury Systems is more favorable than American Defense Systems.

Valuation and Earnings

This table compares American Defense Systems and Mercury Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Defense Systems	N/A	N/A	N/A	N/A	N/A
Mercury Systems	$932.80 million	4.43	-$37.90 million	($0.57)	-120.73

American Defense Systems has higher earnings, but lower revenue than Mercury Systems.

Institutional and Insider Ownership

96.0% of Mercury Systems shares are owned by institutional investors. 19.3% of American Defense Systems shares are owned by company insiders. Comparatively, 1.4% of Mercury Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk and Volatility

American Defense Systems has a beta of 8.53, meaning that its share price is 753% more volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Defense Systems	N/A	N/A	N/A
Mercury Systems	-4.16%	0.58%	0.35%

Summary

Mercury Systems beats American Defense Systems on 8 of the 11 factors compared between the two stocks.

About American Defense Systems

American Defense Systems, Inc., together with its subsidiaries, engages in the design and supply of transparent and opaque armor solutions for military and commercial applications. It offers crew protection kits that provide armor protection of operator compartments; VistaSteel transparent armor, a laminated glass that provides defensive barrier to protect against firearms, physical attack, and explosive blasts; VistaSteel opaque armors; lightweight armor systems; and VistaGuard windows, which are forced entry blast resistant windows, window frames, and transparent armor assemblies used to mitigate forced entry, ballistic, and terrorist threats in high visibility targets. The company also provides portable transparent ballistic shield, a bullet-resistant transparent mobile shield; heated ballistic ship windows; and hardware products, such as hinges, rotary and slam latches, combat locks, and egress windows. Its armor solutions for construction equipment, and tactical and non-tactical transport vehicles are designed to protect their occupants from landmines, hostile fire, and improvised explosive devices. In addition, the company offers engineering and consulting services; and develops and installs detention and security hardware, entry control and monitoring systems, intrusion detection systems, and security glass. Its products are used in transport and fighting vehicles, construction equipment, sea craft, and various fixed structures, which require ballistic and blast attenuation. American Defense Systems, Inc. serves various branches of the United States military, including the United States Department of Defense; and other United States government, law enforcement, and correctional agencies, as well as private sector customers. The company was founded in 1994 and is headquartered in Lillington, North Carolina.

About Mercury Systems

Mercury Systems, Inc., a technology company, manufactures and sells components, products, modules, and subsystems for aerospace and defense industries in the United States, Europe, and the Asia Pacific. Its products and solutions are deployed in approximately 300 programs with 25 defense contractors and commercial aviation customers. The company offers components, including power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, monolithic microwave integrated circuits, and memory and storage devices; modules and sub-assemblies, such as embedded processing boards, switched fabrics and boards, digital receivers, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video boards; and integrated subsystems. It also designs and develops digital radio frequency memory units for various modern electronic warfare applications; radar environment simulation and test systems for defense and intelligence applications; and signals intelligence payloads and EO/IR technologies for small UAV platforms, as well as onboard UAV processor systems for real-time wide area motion imagery. The company was formerly known as Mercury Computer Systems, Inc. and changed its name to Mercury Systems, Inc. in November 2012. The company was incorporated in 1981 and is headquartered in Andover, Massachusetts.