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Mercury General (MCY)
:MCY
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Mercury General
(NYSE:MCY)
68Neutral
Mercury General (MCY) vs. S&P 500 (SPY)
Market Cap
$2.99B
Dividend Yield2.33%
Average Volume (3M)417.51K
Price to Earnings (P/E)6.5
Beta (1Y)0.88
Revenue Growth18.27%
EPS Growth385.75%
CountryUS
Employees4,200
SectorFinancial
Sector Strength81
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)8.45
Shares Outstanding55,388,626
10 Day Avg. Volume306,086
30 Day Avg. Volume417,508
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)N/A
Price to Sales (P/S)0.57
Price to Cash Flow (P/CF)3.10
P/FCF Ratio3.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$80.00Price Target Upside46.60% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Mercury General Business Overview & Revenue Model
Company DescriptionMercury General Corporation (MCY) is a leading insurance company based in the United States, primarily focused on the personal automobile and homeowners insurance sectors. Founded in 1961, the company provides a range of insurance products including auto, home, renters, and umbrella insurance policies. Mercury General operates through a network of independent agents and brokers, ensuring personalized service and comprehensive coverage options for its customers across various states.
How the Company Makes MoneyMercury General makes money primarily through the premiums collected from the insurance policies it underwrites. As a property and casualty insurer, its key revenue streams include personal automobile insurance, which constitutes the majority of its premium income, followed by homeowners insurance. The company also invests the premiums collected in various financial instruments, generating investment income that contributes to its overall earnings. Additionally, Mercury General's profitability is influenced by its claims management efficiency, underwriting expertise, and expense management. Strategic partnerships with independent agents and brokers enable the company to expand its market reach and enhance customer acquisition, thereby driving revenue growth.
Mercury General Financial Statement Overview
Summary
Mercury General's financials display a strong recovery with significant revenue growth and improved profitability. The company has a solid balance sheet with low leverage and strong cash flow generation. However, the absence of EBIT and EBITDA margins warrants cautious analysis.Income Statement
Mercury General has shown strong revenue growth with a 18.3% increase from 2023 to 2024, following a 27.1% growth from 2022 to 2023. The net profit margin improved significantly, from 2.1% in 2023 to 8.5% in 2024. However, EBIT and EBITDA margins have not been provided for 2024, indicating a need for careful examination of operational efficiency.72
Positive
Balance Sheet
The company maintains a relatively low debt-to-equity ratio, decreasing from 0.38 in 2023 to 0.29 in 2024, signaling a strong balance sheet. Return on Equity improved significantly to 24.0% in 2024 from 6.2% in 2023. The equity ratio remained stable at around 23.4% in 2024, supporting a solid financial base.65
Positive
Cash Flow
Operating cash flow to net income ratio is strong at 2.2 in 2024, reflecting efficient cash generation from operations. Free cash flow increased significantly by 138.0% from 2023 to 2024, indicating improved liquidity and operational efficiency. The free cash flow to net income ratio is high at 2.1 in 2024, further emphasizing cash flow strength.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.48B | 4.63B | 3.64B | 3.99B | 3.78B | Gross Profit |
| 5.48B | 4.35B | 3.36B | 3.71B | 3.50B | EBIT |
| 0.00 | 0.00 | -354.63M | 289.28M | 450.21M | EBITDA |
| 0.00 | 195.84M | -571.09M | 395.48M | 544.01M | Net Income Common Stockholders |
| 467.95M | 96.34M | -512.67M | 247.94M | 374.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 720.26M | 729.39M | 412.71M | 475.68M | 724.09M | Total Assets |
| 8.31B | 7.10B | 6.51B | 6.77B | 6.33B | Total Debt |
| 574.13M | 587.96M | 420.25M | 407.51M | 416.36M | Net Debt |
| -146.13M | 37.06M | 130.48M | 71.95M | 67.88M | Total Liabilities |
| 6.36B | 5.56B | 4.99B | 4.63B | 4.30B | Stockholders Equity |
| 1.95B | 1.55B | 1.52B | 2.14B | 2.03B |
| Cash Flow | Free Cash Flow | |||
| 990.98M | 416.18M | 317.08M | 460.14M | 565.66M | Operating Cash Flow |
| 1.04B | 452.99M | 352.59M | 501.58M | 605.62M | Investing Cash Flow |
| -796.66M | -295.44M | -316.38M | -373.67M | -411.29M | Financing Cash Flow |
| -71.11M | 103.58M | -81.99M | -140.84M | -140.25M |
Mercury General Technical Analysis
Neutral
54.57
Price Trends
54.17
Negative
57.44
Negative
60.35
Negative
Market Momentum
-0.19
Negative
50.68
Neutral
79.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCY, the sentiment is Neutral. The current price of 54.57 is above the 20-day moving average (MA) of 53.33, above the 50-day MA of 54.17, and below the 200-day MA of 60.35, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 50.68 is Neutral, neither overbought nor oversold. The STOCH value of 79.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $4.09B | 34.21 | 19.59% | ― | 46.90% | 43.99% | |
79 Outperform | $2.19B | 18.85 | 16.27% | ― | 28.17% | 28.63% | |
69 Neutral | $3.11B | 84.38 | 8.29% | ― | 17.76% | -40.29% | |
68 Neutral | $2.99B | 6.46 | 26.78% | 2.33% | 18.27% | 385.75% | |
67 Neutral | $1.84B | 25.20 | 5.31% | 2.96% | 11.40% | ― | |
63 Neutral | $12.33B | 9.59 | 8.02% | 79.26% | 12.87% | -4.61% | |
54 Neutral | $1.99B | ― | -31.05% | ― | 20.94% | 16.23% |
* Financial Sector Average
Performance Comparison
MCY
Mercury General
53.91
3.36
6.65%
STC
Stewart Information Services
65.51
4.79
7.89%
PLMR
Palomar Holdings
153.15
73.65
92.64%
LMND
Lemonade
29.53
11.58
64.51%
HGTY
Hagerty Inc Class A
8.66
-0.10
-1.14%
SKWD
Skyward Specialty Insurance Group, Inc.
52.06
18.60
55.59%
Mercury General Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: 9.58% | Next Earnings Date: May 6, 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.Highlights
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.
Lowlights
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 Corporate Events
Business Operations and Strategy
Mercury General Addresses Impact of California Wildfires
Neutral
Jan 21, 2025
On January 20, 2025, Mercury General Corporation announced additional details regarding the impact of the recent Southern California wildfires, known as the Palisades and Eaton fires, on its operations and reinsurance program. The company has mobilized its catastrophe loss team and has already paid $80 million to policyholders for living expenses and housing contents, with sufficient liquidity to handle the increased claims. Each wildfire has been designated as a separate event by the Property Claims Service, allowing Mercury to potentially use reinsurance limits of up to $1,290 million for the first event and $1,238 million for the second, implying significant financial management to cover the catastrophic losses.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.