Mercury Systems Inc (MRCY)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 27.90% | 23.45% | 32.52% | 39.97% | 41.69% |
| Operating profit margin | -2.15% | -17.69% | -2.23% | 3.20% | 8.77% |
| Pretax margin | -5.53% | -22.66% | -4.98% | 1.86% | 8.35% |
| Net profit margin | -4.16% | -16.48% | -2.91% | 1.14% | 6.71% |
The analysis of Mercury Systems Inc.'s profitability ratios over the period from June 30, 2021, to June 30, 2025, reveals a significant decline in profitability metrics, indicative of ongoing operational and financial challenges.
Gross profit margin has experienced a steady decrease, declining from 41.69% in 2021 to 32.52% in 2023, with a further decline to 23.45% anticipated in 2024 before a slight recovery to 27.90% in 2025. This trend suggests increasing cost pressures or pricing challenges that have eroded the company's gross profitability over time, impacting the ability to generate profit from sales efficiently.
Operating profit margin demonstrates a more pronounced deterioration, shifting from a robust 8.77% in 2021 to negative figures in subsequent years. By 2023, it turned negative at -2.23%, with further declines to -17.69% in 2024, and marginally improving to -2.15% in 2025. This indicates that operational costs exceeded revenues from operations for multiple periods, reflecting operational inefficiencies or increased operational expenses diminishing earnings before interest and taxes.
Pretax margin follows a similar downward trajectory, declining from 8.35% in 2021 to a negative -4.98% in 2023, with further deterioration to -22.66% in 2024 and a slight improvement to -5.53% in 2025. The negative pretax margins illustrate that profitability before taxes has been severely impacted, likely due to declining operating earnings and possibly increased non-operating expenses or losses.
Net profit margin exhibited a substantial decline from 6.71% in 2021 to 1.14% in 2022, followed by negative values in subsequent years: -2.91% in 2023, -16.48% in 2024, and -4.16% in 2025. This pattern highlights that the company's bottom-line profitability has been significantly impaired, with net losses reported in recent periods. The slight recovery in 2025 suggests some mitigating factors or minor improvements but overall indicates persistent profitability pressures.
In summary, the profitability ratios of Mercury Systems Inc. demonstrate a prominent deterioration over the specified period, transitioning from solid margins in 2021 to consistently negative figures by 2023 onward. The trend reflects declining operational efficiency, margin compression, rising costs, or other structural issues impacting overall profitability. The partial recovery projected in 2025 warrants further investigation to identify underlying causes and assess whether these are sustainable improvements or transient ameliorations.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | — | -6.21% | -0.91% | 1.37% | 4.14% |
| Return on assets (ROA) | — | -5.79% | -1.18% | 0.49% | 3.17% |
| Return on total capital | -6.90% | -10.47% | -1.49% | 4.58% | 6.48% |
| Return on equity (ROE) | -2.57% | -9.35% | -1.81% | 0.73% | 4.18% |
Analyzing Mercury Systems Inc.'s profitability ratios over the period from June 2021 to June 2024 reveals a consistent declining trend, culminating in negative returns by 2023 and beyond.
The Operating Return on Assets (Operating ROA) experienced a significant decrease from 4.14% in June 2021 to 1.37% in June 2022, further plummeting to -0.91% in June 2023 and reaching -6.21% in June 2024. This suggests that the company's core operations have become less efficient at generating operating income relative to its asset base, ultimately turning unprofitable in the most recent periods.
Similarly, the standard Return on Assets (ROA) declined markedly from 3.17% in June 2021 to just 0.49% in June 2022, before turning negative at -1.18% in June 2023 and worsening to -5.79% in June 2024. The negative ROA indicates that the company's net income is insufficient to cover or generate returns from its total assets, reflecting deteriorating profitability at the net income level.
Return on Total Capital, which considers both debt and equity financing, followed an analogous pattern, decreasing from 6.48% in June 2021 to 4.58% in June 2022, then sharply falling into negative territory at -1.49% in June 2023, and further deteriorating to -10.47% in June 2024. The negative figures imply that the company's overall capital structure is not generating adequate returns, likely eroding shareholder value and indicating highly unprofitable investments or operational losses.
The Return on Equity (ROE) has mirrored these trends, declining from 4.18% in June 2021 to 0.73% in June 2022, then turning negative at -1.81% in June 2023, and subsequently worsening to -9.35% in June 2024. This suggests that the company's ability to generate profits for shareholders has significantly diminished, culminating in losses attributable to equity holders in recent periods.
Overall, the profitability ratios demonstrate a deteriorating financial performance for Mercury Systems Inc. over this timeframe. The transition from positive to negative ratios across all measures indicates increasing operational and net losses, declining efficiency in asset and capital deployment, and a substantial erosion of shareholder value.