Mercury General AI Stock Analysis
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Mercury General (MCY) AI Stock Analysis
Mercury General
(NYSE:MCY)
The overall score of 69 reflects a company with excellent financial health and a very attractive valuation that is being weighed down by poor near-term technical momentum. The company's robust profitability, fortress-like balance sheet, and powerful cash flow are significant strengths. However, the stock is in a clear downtrend with bearish technical indicators, creating a tension between strong fundamentals and weak market sentiment. The recent leadership transition adds a layer of uncertainty but appears well-managed. The most significant factor is the disconnect between the company's strong intrinsic performance and its current out-of-favor market position.
Mercury General Key Performance Indicators (KPIs)
Revenue by SegmentBreaks 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.
Core insurance revenue (net premiums earned) shows consistent, multi-year growth, signaling successful rate/volume execution and a strengthening underwriting base. By contrast, investment lines—steady net investment income but highly erratic realized gains and a wildly fluctuating “Other”—drive most quarter-to-quarter earnings volatility. For investors that means underlying business momentum is improving, but headline profits remain exposed to timing of asset sales and one-offs; focus on recurring NPE and NII trends and management’s strategy to smooth or monetize volatile investment items.
The FlyMercury General (MCY) vs. SPDR S&P 500 ETF (SPY)
- Market Cap
- $4.79B
- Dividend Yield
- 1.47%
- Average Volume (3M)
- 307.76K
- Price to Earnings (P/E)
- 7.5
- Beta (1Y)
- 0.89
- Revenue Growth
- 5.42%
- EPS Growth
- 46.21%
- Country
- US
- Employees
- 4,380
- Sector
- Financial
- Sector Strength
- 68
- Industry
- Insurance - Property & Casualty
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 insurance p...
How the Company Makes Money
Mercury General makes money primarily through (1) underwriting income and (2) investment income, with other ancillary income streams related to its insurance operations. 1) Underwriting (insurance) revenue and profitability - Premiums earned: The com...
Mercury General Earnings Call Summary
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
Negative 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
Financial performance is strong, driven by a remarkable earnings recovery, a 10.5% TTM net profit margin, and exceptional cash flow generation with a 95% free cash flow conversion rate. The balance sheet is solid with a conservative 0.20x debt-to-equity ratio and a 37.2% return on equity. The primary concern is the recent TTM revenue decline of 3.2% and a moderation in free cash flow growth, which slightly temper an otherwise excellent profile.
Income Statement
82Very PositiveBalance Sheet
78PositiveCash Flow
85Very Positive| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.14B | 5.99B | 5.48B | 4.63B | 3.64B | 3.99B |
| Gross Profit | 2.74B | 2.03B | 932.86M | 403.25M | -373.76M | 599.82M |
| EBITDA | 903.56M | 767.26M | 679.14M | 195.84M | -571.09M | 395.48M |
| Net Income | 642.78M | 541.09M | 467.95M | 96.34M | -512.67M | 247.94M |
Balance Sheet | ||||||
| Total Assets | 10.35B | 9.56B | 8.31B | 7.10B | 6.51B | 6.77B |
| Cash, Cash Equivalents and Short-Term Investments | 8.53B | 1.65B | 1.00B | 729.39M | 412.71M | 475.68M |
| Total Debt | 586.96M | 586.86M | 587.71M | 587.96M | 420.25M | 407.51M |
| Total Liabilities | 7.54B | 7.14B | 6.36B | 5.56B | 4.99B | 4.63B |
| Stockholders Equity | 2.80B | 2.42B | 1.95B | 1.55B | 1.52B | 2.14B |
Cash Flow | ||||||
| Free Cash Flow | 1.16B | 1.03B | 990.98M | 416.18M | 317.08M | 460.14M |
| Operating Cash Flow | 1.22B | 1.09B | 1.04B | 452.99M | 352.59M | 501.58M |
| Investing Cash Flow | -1.09B | -420.16M | -796.66M | -295.44M | -316.38M | -373.67M |
| Financing Cash Flow | -77.49M | -71.72M | -71.11M | 103.58M | -81.99M | -140.84M |
Mercury General Technical Analysis
Price Trends
Market Momentum
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 86.41 is below the 20-day moving average (MA) of 96.84, below the 50-day MA of 99.60, and below the 200-day MA of 98.28, indicating a bearish trend. The MACD of -4.70 indicates Positive momentum. The RSI at 31.63 is Neutral, neither overbought nor oversold. The STOCH value of 17.07 is Positive, 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.
Latest Risks Added
1 New RiskMercury General Peers Comparison
Overall Rating
ALL84Outperform
PGR83Outperform
THG83Outperform
SAFT75.85Outperform- MCY69Neutral
KMPR55Neutral
Financial Indicators
| Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| ALL | 84Outperform | $64.88B | 5.96 | 36.32% | 1.59% | 5.06% | 42.48% |
| PGR | 83Outperform | $135.30B | 11.89 | 35.44% | 5.90% | 7.65% | 8.90% |
| THG | 83Outperform | $8.54B | 11.74 | 21.03% | 1.53% | 5.04% | 21.26% |
| SAFT | 76Outperform | $1.53B | 21.63 | 8.08% | 3.53% | 4.62% | -18.49% |
| MCY | 69Neutral | $4.78B | 7.48 | 24.15% | 1.47% | 5.42% | 46.21% |
| Sector * | 68Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
| KMPR | 55Neutral | $2.05B | -4.82 | -17.43% | 3.73% | -8.20% | -284.85% |
* Financial Sector Average
Performance Comparison
| Show on chart | Ticker | Company Name | Price | Change | % Change |
|---|---|---|---|---|---|
| MCY | Mercury General | 86.41 | -0.90 | -1.03% | |
| ALL | Allstate Corp | 266.69 | 61.45 | 29.94% | |
| PGR | The Progressive Corporation | 235.49 | 23.91 | 11.30% | |
| SAFT | Safety Insurance | 104.34 | 31.65 | 43.55% | |
| THG | The Hanover Insurance | 247.99 | 72.93 | 41.66% | |
| KMPR | Kemper Corp | 34.30 | -1.00 | -2.82% |
Mercury General Corporate Events
Mercury General Announces Leadership Transition After Founder’s Passing
NegativeOn 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 independe...
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.
Date of analysis: Nov 05, 2026