TAT Technologies (NASDAQ:TATT) versus Mercury Systems (NASDAQ:MRCY) Critical Contrast

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

Volatility & Risk

Mercury Systems has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, TAT Technologies has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mercury Systems	-1.46%	2.22%	1.32%
TAT Technologies	9.27%	9.47%	7.31%

Valuation and Earnings

This table compares Mercury Systems and TAT Technologies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury Systems	$912.02 million	8.07	-$37.90 million	($0.24)	-510.46
TAT Technologies	$177.02 million	3.64	$16.82 million	$1.29	38.48

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Mercury Systems and TAT Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury Systems	2	3	3	2	2.50
TAT Technologies	0	2	4	3	3.11

Mercury Systems presently has a consensus target price of $91.00, indicating a potential downside of 25.72%. TAT Technologies has a consensus target price of $57.29, indicating a potential upside of 15.41%. Given TAT Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe TAT Technologies is more favorable than Mercury Systems.

Insider and Institutional Ownership

96.0% of Mercury Systems shares are held by institutional investors. Comparatively, 15.1% of TAT Technologies shares are held by institutional investors. 1.4% of Mercury Systems shares are held by company insiders. Comparatively, 8.7% of TAT Technologies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

TAT Technologies beats Mercury Systems on 12 of the 15 factors compared between the two stocks.

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.

About TAT Technologies

TAT Technologies Ltd., together with its subsidiaries, provides solutions and services to the commercial and military aerospace, and ground defense industries in the United States, Israel, and internationally. The company operates through four segments: Original Equipment Manufacturing (OEM) of Heat Transfer Solutions and Aviation Accessories; Maintenance, Repair, and Overhaul (MRO) Services for Heat Transfer Components and OEM of Heat Transfer Solutions; MRO Services for Aviation Components; and Overhaul and Coating of Jet Engine Components. It designs, develops, and manufactures a range of heat transfer solutions, such as pre-cooler and oil/fuel hydraulic heat exchangers used in mechanical and electronic systems in commercial, military, and business aircraft; environmental control and power electronics cooling systems for use in aircraft and ground applications; and a range of other mechanical aircraft accessories and systems, such as pumps, valves, and turbine power units. The company provides MRO services for heat transfer components, as well as for manufacturing heat transfer solutions; and aviation components. In addition, it engages in the operation of a repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers, and the military; and the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes, and afterburner flaps. The company was formerly known as Galagraph Ltd. and changed its name to TAT Technologies Ltd. in May 1992. TAT Technologies Ltd. was founded in 1969 and is headquartered in Netanya, Israel.