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Mercury General Corp. (MCY)
NYSE:MCY
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Mercury General
(NYSE:MCY)
Rating:75Outperform
Price Target:
$69.00
▲( 15.17% Upside)
Mercury General (MCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.45B
Dividend Yield2.04%
Average Volume (3M)363.62K
Price to Earnings (P/E)12.0
Beta (1Y)0.86
Revenue Growth16.64%
EPS Growth33.06%
CountryUS
Employees4,200
SectorFinancial
Sector Strength81
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)-2.29
Shares Outstanding55,388,626
10 Day Avg. Volume379,351
30 Day Avg. Volume363,617
Financial Highlights & Ratios
PEG Ratio-0.31
Price to Book (P/B)1.89
Price to Sales (P/S)0.00
P/FCF Ratio4.74
Enterprise Value/Market Cap0.80
Enterprise Value/Revenue0.13
Enterprise Value/Gross Profit-2.29
Enterprise Value/Ebitda1.34
Forecast
1Y Price Target
$80.00Price Target Upside33.53% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
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 Corporation generates revenue primarily through the sale of insurance policies. The company underwrites premiums for personal automobile insurance, which constitutes the majority of its income. In addition to auto insurance, Mercury General also provides homeowners, renters, and commercial insurance policies, which contribute to its revenue streams. The company earns money from policyholder premiums, investment income generated from its portfolio of invested assets, and through underwriting gains, which occur when collected premiums exceed paid claims and expenses. Strategic partnerships with independent agents and brokers also play a crucial role in expanding Mercury General's market reach and customer base, further driving its revenue growth.
Mercury General Financial Statement Overview
Summary
Mercury General's financials present a mixed picture. The income statement highlights profitability issues with a negative gross profit margin, but revenue is growing. The balance sheet shows strength with low leverage and good equity returns. Cash flow generation is solid, despite a recent decline in free cash flow. Overall, the company is stable but faces profitability challenges that need addressing.Income Statement
The income statement shows a mixed performance. The TTM data reveals a gross profit margin of -21.52% and a net profit margin of 5.11%, indicating profitability challenges. However, revenue has shown a positive growth trajectory, increasing by 20.84% from 2023 to 2024. EBITDA margin stands at 6.26% in TTM, showcasing some operational efficiency despite the negative gross profit margin.65
Positive
Balance Sheet
The balance sheet is relatively strong with a debt-to-equity ratio of 0.33 in TTM, reflecting low leverage. Return on equity (ROE) is at 15.72%, indicating effective use of equity. The equity ratio is 20.16%, providing a stable capital structure. The company's liabilities are well-covered by its equity, though there is room for improvement in asset efficiency.70
Positive
Cash Flow
The cash flow statement is robust, with a free cash flow growth rate of -26.68% from 2023 to 2024, indicating a decrease in free cash flow. However, the operating cash flow to net income ratio is 2.71 in TTM, suggesting strong cash generation relative to net income. Free cash flow to net income ratio is 2.54, underscoring the company's efficient cash conversion.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.60B | 5.48B | 4.63B | 3.64B | 3.99B | 3.78B | Gross Profit |
| -1.20B | 5.48B | 4.35B | 3.36B | 3.71B | 3.50B | EBIT |
| 366.42M | 605.70M | 0.00 | -354.63M | 289.28M | 450.21M | EBITDA |
| 350.32M | 605.70M | 195.84M | -571.09M | 395.48M | 544.01M | Net Income Common Stockholders |
| 286.16M | 467.95M | 96.34M | -512.67M | 247.94M | 374.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.00B | 720.26M | 729.39M | 412.71M | 475.68M | 724.09M | Total Assets |
| 8.31B | 8.31B | 7.10B | 6.51B | 6.77B | 6.33B | Total Debt |
| 587.71M | 587.71M | 587.96M | 420.25M | 407.51M | 416.36M | Net Debt |
| -132.55M | -132.55M | 37.06M | 130.48M | 71.95M | 67.88M | Total Liabilities |
| 6.43B | 6.36B | 5.56B | 4.99B | 4.63B | 4.30B | Stockholders Equity |
| 1.95B | 1.95B | 1.55B | 1.52B | 2.14B | 2.03B |
| Cash Flow | Free Cash Flow | ||||
| 726.75M | 990.98M | 416.18M | 317.08M | 460.14M | 565.66M | Operating Cash Flow |
| 775.76M | 1.04B | 452.99M | 352.59M | 501.58M | 605.62M | Investing Cash Flow |
| 49.83M | -796.66M | -295.44M | -316.38M | -373.67M | -411.29M | Financing Cash Flow |
| -70.88M | -71.11M | 103.58M | -81.99M | -140.84M | -140.25M |
Mercury General Technical Analysis
Neutral
59.91
Price Trends
56.27
Positive
54.97
Positive
60.62
Negative
Market Momentum
1.74
Negative
56.40
Neutral
56.56
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 59.91 is above the 20-day moving average (MA) of 58.84, above the 50-day MA of 56.27, and below the 200-day MA of 60.62, indicating a neutral trend. The MACD of 1.74 indicates Negative momentum. The RSI at 56.40 is Neutral, neither overbought nor oversold. The STOCH value of 56.56 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $4.25B | 32.26 | 20.76% | ― | 46.90% | 43.99% | |
79 Outperform | $2.55B | 20.69 | 16.03% | ― | 25.88% | 9.45% | |
75 Outperform | $3.45B | 12.04 | 16.71% | 2.04% | 16.64% | 33.06% | |
74 Outperform | $3.26B | 43.69 | 12.50% | ― | 17.56% | 29.28% | |
67 Neutral | $1.80B | 24.87 | 5.31% | 3.18% | 11.40% | ― | |
64 Neutral | $12.66B | 9.81 | 7.67% | 17015.07% | 12.33% | -5.97% | |
47 Neutral | $2.33B | ― | -35.57% | ― | 21.44% | 2.99% |
* Financial Sector Average
Performance Comparison
MCY
Mercury General
59.91
4.49
8.10%
STC
Stewart Information Services
60.82
-0.80
-1.30%
PLMR
Palomar Holdings
160.82
79.15
96.91%
LMND
Lemonade
30.91
14.83
92.23%
HGTY
Hagerty Inc Class A
9.19
0.24
2.68%
SKWD
Skyward Specialty Insurance Group, Inc.
60.47
24.71
69.10%
Mercury General Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q4-2024)
| % Change Since: 1.59%|
Next Earnings Date:Aug 05, 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 Corporate Events
Shareholder MeetingsBusiness Operations and Strategy
Mercury General Holds Annual Shareholder Meeting
Neutral
May 15, 2025
On May 14, 2025, Mercury General Corporation held its Annual Meeting of Shareholders where all nine directors were elected, the compensation for named executive officers was approved, and KPMG LLP was ratified as the independent registered public accounting firm for the fiscal year ending December 31, 2025. These decisions reflect the company’s ongoing governance and operational strategies, potentially impacting its financial oversight and executive management, which are crucial for stakeholders.
The most recent analyst rating on (MCY) stock is a Buy with a $80.00 price target. To see the full list of analyst forecasts on Mercury General stock, see the MCY Stock Forecast page.
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.