Discounted Cash Flow (DCF) Analysis Levered

Mercury Systems, Inc. (MRCY)

$36.69

+0.70 (+1.95%)

All numbers are in Millions, Currency in USD

Stock DCF: 4.75 | 36.69 | overvalue

Free Cash Flow

Year A/P	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Actual	2024 Projected	2025 Projected	2026 Projected	2027 Projected	2028 Projected
Revenue	654.74	796.61	924	988.20	973.88	1,078.96	1,195.37	1,324.35	1,467.24	1,625.55
Revenue (%)
Operating Cash Flow	97.52	115.18	97.25	-18.87	-21.25	77.22	85.56	94.79	105.01	116.34
Operating Cash Flow (%)
Capital Expenditure	-26.69	-43.29	-45.60	-27.66	-38.80	-45.81	-50.75	-56.23	-62.29	-69.02
Capital Expenditure (%)
Free Cash Flow	70.83	71.89	51.65	-46.52	-60.05	31.41	34.80	38.56	42.72	47.33

Weighted Average Cost Of Capital

Share price	$ 36.69
Beta	0.884
Diluted Shares Outstanding	56.55
Cost of Debt
Tax Rate	41.63
After-tax Cost of Debt	2.54%
Risk-Free Rate
Market Risk Premium
Cost of Equity	8.802
Total Debt	578.30
Total Equity	2,074.97
Total Capital	2,653.26
Debt Weighting	21.80
Equity Weighting	78.20
Wacc

Build Up Free Cash Flow

Year A/P	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Actual	2024 Projected	2025 Projected	2026 Projected	2027 Projected	2028 Projected
Revenue	654.74	796.61	924	988.20	973.88	1,078.96	1,195.37	1,324.35	1,467.24	1,625.55
Operating Cash Flow	97.52	115.18	97.25	-18.87	-21.25	77.22	85.56	94.79	105.01	116.34
Capital Expenditure	-26.69	-43.29	-45.60	-27.66	-38.80	-45.81	-50.75	-56.23	-62.29	-69.02
Free Cash Flow	70.83	71.89	51.65	-46.52	-60.05	31.41	34.80	38.56	42.72	47.33
WACC
PV LFCF						29.24	30.15	31.09	32.06	33.06
SUM PV LFCF										155.60

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.44
Free cash flow (t + 1)	48.27
Terminal Value	887.39
Present Value of Terminal Value	619.85

Intrinsic Value

Enterprise Value	775.44
Net Debt	506.73
Equity Value	268.71
Shares Outstanding	56.55
Equity Value Per Share	4.75