Discounted Cash Flow (DCF) Analysis Levered

Mercury Systems, Inc. (MRCY)

$40.55

+1.06 (+-%)

All numbers are in Millions, Currency in USD

Stock DCF: 31.58 | 40.55 | overvalue

Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	493.18	654.74	796.61	924	988.20	1,179.33	1,407.42	1,679.64	2,004.50	2,392.20
Revenue (%)
Operating Cash Flow	43.32	97.52	115.18	97.25	-18.87	110.27	131.60	157.05	187.43	223.68
Operating Cash Flow (%)
Capital Expenditure	-15.11	-26.69	-43.29	-45.60	-27.66	-47.90	-57.16	-68.22	-81.41	-97.16
Capital Expenditure (%)
Free Cash Flow	28.22	70.83	71.89	51.65	-46.52	62.37	74.44	88.83	106.02	126.52

Weighted Average Cost Of Capital

Share price	$ 40.55
Beta	0.998
Diluted Shares Outstanding	55.90
Cost of Debt
Tax Rate	38.71
After-tax Cost of Debt	0.68%
Risk-Free Rate
Market Risk Premium
Cost of Equity	8.412
Total Debt	521.39
Total Equity	2,266.79
Total Capital	2,788.17
Debt Weighting	18.70
Equity Weighting	81.30
Wacc

Build Up Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	493.18	654.74	796.61	924	988.20	1,179.33	1,407.42	1,679.64	2,004.50	2,392.20
Operating Cash Flow	43.32	97.52	115.18	97.25	-18.87	110.27	131.60	157.05	187.43	223.68
Capital Expenditure	-15.11	-26.69	-43.29	-45.60	-27.66	-47.90	-57.16	-68.22	-81.41	-97.16
Free Cash Flow	28.22	70.83	71.89	51.65	-46.52	62.37	74.44	88.83	106.02	126.52
WACC
PV LFCF						58.31	65.05	72.58	80.97	90.33
SUM PV LFCF										367.24

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.97
Free cash flow (t + 1)	129.05
Terminal Value	2,596.60
Present Value of Terminal Value	1,853.94

Intrinsic Value

Enterprise Value	2,221.18
Net Debt	455.73
Equity Value	1,765.44
Shares Outstanding	55.90
Equity Value Per Share	31.58