Reviewing Saab (OTCMKTS:SAABY) & Mercury Systems (NASDAQ:MRCY)

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

Institutional & Insider Ownership

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

Analyst Recommendations

This is a summary of current ratings for Saab and Mercury Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saab	2	1	0	0	1.33
Mercury Systems	2	3	4	1	2.40

Mercury Systems has a consensus target price of $86.33, suggesting a potential upside of 9.41%. Given Mercury Systems’ stronger consensus rating and higher possible upside, analysts plainly believe Mercury Systems is more favorable than Saab.

Risk and Volatility

Saab has a beta of -0.07, meaning that its stock price is 107% less volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saab	$8.42 billion	4.00	$645.29 million	$0.74	42.46
Mercury Systems	$912.02 million	5.19	-$37.90 million	($0.53)	-148.89

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Saab	7.99%	15.73%	5.82%
Mercury Systems	-3.23%	1.28%	0.76%

Summary

Mercury Systems beats Saab on 8 of the 15 factors compared between the two stocks.

About Saab

Saab AB (publ) provides products, services, and solutions for military defense, aviation, and civil security markets worldwide. The company operates through Aeronautics, Dynamics, Surveillance, Kockums, and Combitech segments. The company develops military aviation technology, as well as conducts studies on manned and unmanned aircraft. It also provides ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles, training and simulation systems, and signature management systems for armed forces; and niche products for the civil and defense market, such as underwater vehicles for the offshore industry. In addition, the company offers solutions for safety and security, surveillance and decision support, and threat detection, location, and protection, including airborne, ground-based and naval radar, electronic warfare, and combat systems, as well as C4I solutions. Additionally, it provides submarines with the Stirling system for air independent propulsion, surface combatants, mine hunting systems, and autonomous vessels; and systems development, systems integration, information security, systems security, communications, mechanics, and technical product information and logistics. Saab AB (publ) was incorporated in 1937 and is headquartered in Stockholm, Sweden.

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.