HYPOTHESIS. The 31% fall since July 2 is the multiple deflating, not evidence the business has broken: the latest quarter grew revenue 22.9% year on year, yet the stock still trades at 5.7x enterprise value to revenue, the 80th percentile of its own five-year range and three times the peer median [1][2][3]. My reading: the price has further to compress before real buyers return. Strength of belief: medium. The growth number is real, but the packet carries no filing, so I cannot check what management said behind it. Checkpoint: our scoring date, 2026-11-30.
POSITIONING STATUS. Not positioned. We held MRCY and exited on 2026-08-27 at a 21.1% loss [4]. Looking for an entry near $70, the zone of the March trough at $69.86, with the multiple back near its own 3.8x median and the price stabilised rather than making new 60-day lows [1][3].
The stock. MRCY closed at $87.33 on 2026-08-31, the lowest close of the last 60 sessions, 30.8% below its July 2 high of $126.21 [1]. This stock falls hard when it falls: three drawdowns of 21% to 32% in the past year, the deepest bottoming at $69.86 in March [1]. Today's close sits just above the $77.50 floor that held eight in ten closes since March [1].
The valuation. At $87.33 the company is worth $7.52 billion, 5.5x trailing revenue of $983.6 million [2]. EV/revenue is 5.7x against its own five-year median of 3.8x and low of 2.5x in 2024, and against a peer median of 1.8x [2][3]. EV/EBITDA is 73.6x on $34.5 million of EBITDA; profit margin is 0.3% [2]. The peer set here is a mixed industrial cohort, not pure defense electronics, so I weight the company's own history more than the peer gap. That is my reading, not the packet's.
What is missing. No filing packet, no company context, no strategy ledger entries on this name, and no open hypothesis on file [5]. That caps belief at medium and rules out any claim about backlog, margin drivers, or management's plan.
What to watch. The 60-day low sequence stopping; the multiple approaching 3.8x; the next quarterly filing.
The call
Stance: watch
Level: 70
Horizon: 2026-11-30
Checkpoint: 2026-11-30
What closes the file: A close back above 113.42, the top of the March band, before the multiple returns near its 3.8x median would falsify the thesis that the price resets lower first.
Receipts5
[1] Insight packet 2026-08-31 (sha cac6ef50), Market context, Alpaca daily bars: close $87.33 on 2026-08-31, 52-week high $126.21 (2026-07-02), off high 30.8%, drawdowns 32.2%/30.8%/21.3%, March trough $69.86 (2026-03-30), band $77.50-$113.42 with 96 of 120 closes inside, lowest close of last 60 sessions $87.33.
[2] Same packet, Valuation (FMP, fetched 2026-08-31): market cap $7.52B, EV $7.80B, trailing revenue $983.6M, EV/revenue 5.7x, price/sales 5.4x, EV/EBITDA 73.6x, EBITDA $34.5M, profit margin 0.3%, revenue growth 22.9% y/y, quarter ended 2026-07-03.
[3] Same packet, EV/revenue history and cohort: own history low 2.5x (2024-06-30), median 3.8x, high 7.9x (2026-07-03), current 80th percentile; peer medians EV/revenue 1.8x, EV/EBITDA 10.8x.
[4] Same packet, Our book: MRCY exit 2026-08-27, -21.1%, trigger s6_committee; held_qty 0, card reads below zone.
[5] Same packet, What came back no data: filing packet, company context, strategy ledger, open hypotheses all absent with reasons stated.