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Mercury General Corp. (MCY)
NYSE:MCY
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Mercury General
(NYSE:MCY)
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Rating:65Neutral
Price Target:
$83.00
▲(7.37% Upside)
Mercury General's solid financial performance and reasonable valuation are offset by bearish technical indicators. The company's strong cash flow and conservative leverage provide stability, but the current market momentum suggests caution.
Mercury General (MCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.28B
Dividend Yield1.64%
Average Volume (3M)213.83K
Price to Earnings (P/E)11.0
Beta (1Y)0.92
Revenue Growth14.93%
EPS Growth22.19%
CountryUS
Employees4,200
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)2.67
Shares Outstanding55,388,626
10 Day Avg. Volume172,132
30 Day Avg. Volume213,832
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)1.89
Price to Sales (P/S)0.67
P/FCF Ratio3.71
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue0.75
Enterprise Value/Gross Profit2.26
Enterprise Value/Ebitda7.56
Forecast
1Y Price Target
$100.00Price Target Upside29.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Mercury General Business Overview & Revenue Model
Company DescriptionMercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, fire, and other hazards. The company sells its policies through a network of independent agents and insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.
How the Company Makes MoneyMercury General primarily generates revenue through the underwriting of insurance premiums. The company collects premiums from policyholders in exchange for coverage against specified risks. The key revenue streams include automobile insurance, property insurance, and various types of commercial insurance. Additionally, Mercury General earns investment income from the premiums it collects, which are invested in a diversified portfolio until claims are paid. The company's profitability is also influenced by its ability to manage claims effectively and maintain a low loss ratio. Significant partnerships with agents and brokers help widen its distribution channels, contributing to its earnings through increased policy sales.
Mercury General Earnings Call Summary
Earnings Call Date:Jul 29, 2025
(Q4-2024)
| % Change Since: |
Next Earnings Date:Nov 04, 2025
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.Q4-2024 Updates
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.
Improved Combined Ratios
The combined ratio for the quarter was 91.4%, and 96% for the year-to-date. Excluding catastrophe losses, the combined ratio was 88.3% for the quarter and 90.5% for the full year.
Strong Investment Income Growth
Investment income after tax was $61.5 million in Q4, increasing by 15% from the prior quarter and 18% from the previous year.
Significant Premium Growth
Net premiums written grew by 16% to $1.3 billion in the quarter and 20.5% to $5.4 billion for the year.
Favorable Personal Auto and Homeowners Results
The personal auto business posted a core underlying combined ratio of 92.1%, and the homeowners business posted a core underlying combined ratio of 76.1% for the full year.
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.
Significant Expected Catastrophe Losses for 2025
Gross catastrophe losses from January wildfires are estimated to be $1.6 billion, with pre-tax net catastrophe losses estimated between $155 million to $325 million.
Reinsurance Cost Concerns
Reinsurance costs are expected to increase moderately due to recent catastrophic events and will impact future pricing and premiums.
Uncertain Impact of Fair Plan Losses
There is uncertainty regarding the total impact of Fair Plan losses, with an expected $50 million assessment, 50% of which is recoupable.
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
Mercury General demonstrates a solid financial position with consistent revenue growth and strong cash flow generation. However, profitability margins have faced some pressure, and operational efficiency could be improved.Income Statement
Mercury General has shown a consistent revenue growth trend, with a 3.09% increase in the TTM period. The gross profit margin improved significantly to 33.12% in TTM, indicating better cost management. However, the net profit margin decreased slightly to 6.76% from the previous year, suggesting some pressure on profitability. The EBIT and EBITDA margins also showed a decline, indicating potential challenges in operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio remains stable at 0.29, reflecting a conservative leverage approach. Return on equity decreased to 20.53% in TTM, down from 24.04% in the previous year, indicating a slight decline in profitability relative to shareholder equity. The equity ratio is healthy, suggesting a strong capital structure.70
Positive
Cash Flow
Mercury General's free cash flow growth rate improved significantly by 12.49% in TTM, showcasing strong cash generation capabilities. The operating cash flow to net income ratio is robust at 22.91, indicating efficient cash conversion. The free cash flow to net income ratio remains high, reflecting effective cash management.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.77B | 5.48B | 4.63B | 3.64B | 3.99B | 3.78B |
| Gross Profit | 1.91B | 932.86M | 403.25M | -373.76M | 599.82M | 3.50B |
| EBITDA | 571.10M | 605.70M | 195.84M | -571.09M | 395.48M | 544.01M |
| Net Income | 390.07M | 467.95M | 96.34M | -512.67M | 247.94M | 374.61M |
Balance Sheet | ||||||
| Total Assets | 9.08B | 8.31B | 7.10B | 6.51B | 6.77B | 6.33B |
| Cash, Cash Equivalents and Short-Term Investments | 1.12B | 720.26M | 729.39M | 412.71M | 475.68M | 724.09M |
| Total Debt | 574.33M | 587.71M | 587.96M | 420.25M | 407.51M | 416.36M |
| Total Liabilities | 7.11B | 6.36B | 5.56B | 4.99B | 4.63B | 4.30B |
| Stockholders Equity | 1.97B | 1.95B | 1.55B | 1.52B | 2.14B | 2.03B |
Cash Flow | ||||||
| Free Cash Flow | 817.53M | 990.98M | 416.18M | 317.08M | 460.14M | 565.66M |
| Operating Cash Flow | 869.32M | 1.04B | 452.99M | 352.59M | 501.58M | 605.62M |
| Investing Cash Flow | -285.39M | -796.66M | -295.44M | -316.38M | -373.67M | -411.29M |
| Financing Cash Flow | -71.02M | -71.11M | 103.58M | -81.99M | -140.84M | -140.25M |
Mercury General Technical Analysis
Negative
77.30
Price Trends
79.81
Negative
74.07
Positive
64.52
Positive
Market Momentum
-0.87
Positive
40.40
Neutral
31.02
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 77.3 is below the 20-day moving average (MA) of 80.18, below the 50-day MA of 79.81, and above the 200-day MA of 64.52, indicating a neutral trend. The MACD of -0.87 indicates Positive momentum. The RSI at 40.40 is Neutral, neither overbought nor oversold. The STOCH value of 31.02 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 43 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 |
|---|---|---|---|---|---|---|---|
| ― | $5.41B | 15.44 | 19.49% | 4.44% | 3.72% | -16.23% | |
| ― | $4.55B | 11.60 | 12.22% | 1.99% | 10.98% | 74.87% | |
| ― | $2.64B | 18.08 | 23.90% | 0.80% | 9.62% | -18.69% | |
| ― | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
| ― | $4.28B | 10.97 | 21.56% | 1.64% | 14.93% | 22.19% | |
| ― | $4.90B | 23.66 | 4.47% | 0.05% | 8.08% | -57.76% | |
| ― | $2.82B | 8.48 | 12.21% | 2.82% | 2.75% | 572.22% |
* Financial Sector Average
MCY
Mercury General
77.30
12.01
18.39%
RLI
RLI
58.96
-17.79
-23.18%
SIGI
Selective Insurance Group
75.34
-15.12
-16.71%
KMPR
Kemper
44.99
-16.38
-26.69%
WTM
White Mountains Insurance Group
1,904.56
131.43
7.41%
HCI
HCI Group
204.01
93.05
83.86%
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.