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Mercury General
(NYSE:MCY)
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Rating:73Outperform
Price Target:
$116.00
▲(8.13% Upside)
Action:Reiterated
Date:08/27/26
MCY scores well primarily due to a sharp financial recovery with strong profitability and cash generation, supported by a very low P/E valuation. Offsetting factors include weaker near-term technical momentum and some event-driven uncertainty around leadership transition and funding actions, which temper the overall score.
Positive Factors
Profitability Recovery
The rebound indicates materially improved underwriting and earnings capacity after the 2022 loss year. Strong margins provide a larger buffer against claims-cost pressure, although insurance results can still vary with catastrophe experience.
Negative Factors
Catastrophe and Underwriting Volatility
Personal-lines insurance remains exposed to catastrophe losses, claims inflation, and reserve uncertainty. The documented 2022 loss and inconsistent historical returns show that a strong current result may not represent a stable through-cycle earnings level.
Read all positive and negative factors
Positive Factors
Negative Factors
Profitability Recovery
The rebound indicates materially improved underwriting and earnings capacity after the 2022 loss year. Strong margins provide a larger buffer against claims-cost pressure, although insurance results can still vary with catastrophe experience.
Read all positive factors
Mercury General Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down Mercury’s revenue across its business lines (for example personal auto, commercial auto, homeowners), revealing where earnings are concentrated and how diversified the company is. Heavy reliance on one segment, like personal auto, increases exposure to state-specific accident trends, regulatory changes, and competitive pricing; a more balanced mix reduces single-market risk and highlights multiple growth levers. Investors use segment trends to identify which lines are driving growth and which may pressure margins or require capital.
Breaks down Mercury’s revenue across its business lines (for example personal auto, commercial auto, homeowners), revealing where earnings are concentrated and how diversified the company is. Heavy reliance on one segment, like personal auto, increases exposure to state-specific accident trends, regulatory changes, and competitive pricing; a more balanced mix reduces single-market risk and highlights multiple growth levers. Investors use segment trends to identify which lines are driving growth and which may pressure margins or require capital.
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The Fly
The FlyMercury General (MCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.79B
Dividend Yield1.21%
Average Volume (3M)302.40K
Price to Earnings (P/E)6.2
Beta (1Y)0.84
Revenue Growth9.95%
EPS Growth140.12%
CountryUS
Employees4,380
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)16.92
Shares Outstanding55,388,626
10 Day Avg. Volume267,364
30 Day Avg. Volume302,398
Financial Highlights & Ratios
PEG Ratio0.62
Price to Book (P/B)2.16
Price to Sales (P/S)0.87
P/FCF Ratio5.06
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)11.87
Revenue Forecast (FY)$6.21B
Mercury General Business Overview & Revenue Model
Company Description
Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. It also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insuranc...
How the Company Makes Money
Mercury General makes money primarily through (1) underwriting insurance and (2) investing the premiums it holds. Underwriting revenue is generated when policyholders pay premiums for coverage (most notably private passenger auto). The company rec...
Mercury General Earnings Call Summary
Earnings Call Date:Feb 11, 2025
(Q4-2024)
| % Change Since: |
Next Earnings Date:Nov 03, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance in terms of record operating income, improved combined ratios, and significant premium growth. However, these positive results are overshadowed by the substantial impact of catastrophe losses from wildfires and the expected increase in reinsurance costs, leading to concerns about future financial stability.Positive Updates
Record After-Tax Operating Income
The company reported a fourth quarter after-tax operating income of $98 million, the highest in the company's history.
Negative Updates
Catastrophe Losses Impact
Catastrophe losses were $41 million for the quarter, adding 3 points to the combined ratio. Full-year catastrophe losses added 5.5 points to the combined ratio.
Read all updates
Q4-2024 Updates
Positive
Negative
Record After-Tax Operating Income
The company reported a fourth quarter after-tax operating income of $98 million, the highest in the company's history.
Read all positive updates
Company Guidance
During Mercury General Corporation's fourth quarter 2024 conference call, the company reported its highest-ever after-tax operating income of $98 million, driven by rate increases and moderating inflation, which reduced the combined ratio to 91.4% for the quarter and 96% for the year. Catastrophe losses totaled $41 million, impacting the full-year combined ratio by 5.5 points, and excluding these losses, the combined ratio was 88.3% for the quarter and 90.5% for the year. Investment income after tax rose by 15% in the fourth quarter to $61.5 million, spurred by a 16% increase in average investment balances. Net premiums written grew by 16% in the quarter and 20.5% for the full year, reaching $1.3 billion and $5.4 billion, respectively. Looking forward to 2025, the company expects core underlying earnings to offset wildfire-related catastrophe losses, with investment income anticipated to remain near 2024 levels. The company estimates gross catastrophe losses from January wildfires at $1.6 billion and pretax net losses between $155 million and $325 million, with reinstatement premiums of $80 million to $101 million.Mercury General Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.34B | 5.99B | 5.48B | 4.63B | 3.64B | 3.99B |
| Gross Profit | 2.84B | 2.03B | 932.86M | 403.25M | -373.76M | 599.82M |
| EBITDA | 1.27B | 767.26M | 679.14M | 195.84M | -571.09M | 395.48M |
| Net Income | 936.87M | 541.09M | 467.95M | 96.34M | -512.67M | 247.94M |
Balance Sheet | ||||||
| Total Assets | 10.54B | 9.56B | 8.31B | 7.10B | 6.51B | 6.77B |
| Cash, Cash Equivalents and Short-Term Investments | 2.07B | 1.65B | 1.00B | 729.39M | 412.71M | 475.68M |
| Total Debt | 962.13M | 586.86M | 587.71M | 587.96M | 420.25M | 407.51M |
| Total Liabilities | 7.71B | 7.14B | 6.36B | 5.56B | 4.99B | 4.63B |
| Stockholders Equity | 2.84B | 2.42B | 1.95B | 1.55B | 1.52B | 2.14B |
Cash Flow | ||||||
| Free Cash Flow | 1.26B | 1.03B | 990.98M | 416.18M | 317.08M | 460.14M |
| Operating Cash Flow | 1.33B | 1.09B | 1.04B | 452.99M | 352.59M | 501.58M |
| Investing Cash Flow | -1.05B | -420.16M | -796.66M | -295.44M | -316.38M | -373.67M |
| Financing Cash Flow | 298.26M | -71.72M | -71.11M | 103.58M | -81.99M | -140.84M |
Mercury General Technical Analysis
Negative
107.28
Price Trends
106.70
Negative
102.02
Positive
95.72
Positive
Market Momentum
-0.43
Positive
47.01
Neutral
35.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCY, the sentiment is Negative. The current price of 107.28 is above the 20-day moving average (MA) of 106.26, above the 50-day MA of 106.70, and above the 200-day MA of 95.72, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 47.01 is Neutral, neither overbought nor oversold. The STOCH value of 35.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MCY.
Mercury General Risk Analysis
Mercury General disclosed 44 risk factors in its most recent earnings report. Mercury General reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mercury General Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $5.47B | 11.46 | 13.87% | 1.80% | 7.30% | 32.16% | |
83 Outperform | $5.96B | 13.63 | 24.37% | 4.08% | 10.29% | 35.39% | |
82 Outperform | $5.11B | 4.85 | 21.34% | 0.05% | 21.20% | 445.91% | |
81 Outperform | $2.31B | 7.22 | 30.79% | 0.89% | 22.83% | 86.58% | |
73 Outperform | $5.79B | 6.21 | 37.19% | 1.18% | 9.95% | 140.12% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
55 Neutral | $1.64B | -3.38 | -19.33% | 4.44% | -3.92% | -256.50% |
* Financial Sector Average
MCY
Mercury General
105.07
29.04
38.19%
RLI
RLI
64.86
2.63
4.22%
SIGI
Selective Insurance Group
92.38
15.79
20.62%
KMPR
Kemper
28.41
-22.81
-44.54%
WTM
White Mountains Insurance Group
2,132.74
308.18
16.89%
HCI
HCI Group
187.08
24.17
14.83%
Mercury General Corporate Events
Business Operations and StrategyExecutive/Board Changes
Mercury General Announces Leadership Transition After Founder’s Passing
Negative
Aug 26, 2026
On August 26, 2026, Mercury General announced the passing of its founder and longtime chairman George Joseph at age 104, marking the end of an era for the insurer that he built from a six-person California operation into the state’s largest ...
Business Operations and StrategyRegulatory Filings and Compliance
Mercury General Updates Regulatory Disclosures After Agreement Termination
Neutral
Jun 24, 2026
Mercury General disclosed that information previously reported in one section of its filing has been formally incorporated into another section. This procedural update indicates the company is aligning its disclosures for consistency and clarity w...
Private Placements and FinancingRegulatory Filings and Compliance
Mercury General Completes New Notes Offering to Boost Flexibility
Positive
Jun 12, 2026
On June 9, 2026, Mercury General entered into an underwriting agreement with BofA Securities, Wells Fargo Securities and Raymond James for a notes offering, with the sale closing on June 12, 2026. The notes were issued under an effective shelf reg...
Financial Disclosures
Mercury General Posts Strong Q1 2026 Profit Rebound
Positive
Jun 9, 2026
Mercury General reported strong financial performance for the quarter ended March 31, 2026, with net premiums earned rising to $1.45 billion from $1.28 billion a year earlier and net premiums written increasing to $1.55 billion from $1.31 billion....
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.