Mercury General (MCY)
NYSE:MCY
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Mercury General
(NYSE:MCY)
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Rating:74Outperform
Price Target:
$108.00
â–²(15.98% Upside)
Action:ReiteratedDate:02/19/26
MCY scores well primarily on financial performance, led by very strong recent cash generation, improved profitability, and conservative leverage. Valuation is also supportive with a low P/E and a modest dividend. The main drag is technicals, with the stock trading below key short-term moving averages and momentum indicators suggesting limited near-term upside.
Positive Factors
Strong cash generation
Operating cash flow and free cash flow have grown materially through 2025, with free cash flow about 95% of net income in 2025. That persistent cash conversion supports reserve funding, dividend/buyback capacity and capital allocation even if underwriting margins face headwinds.
Negative Factors
Earnings cyclicality and sensitivity
Mercury's returns and book value have swung materially with underwriting cycles, evidenced by a negative ROE in 2022. Such volatility can erode capital in stress years, complicate multi-year planning and make long-term return predictability difficult for investors and management.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Operating cash flow and free cash flow have grown materially through 2025, with free cash flow about 95% of net income in 2025. That persistent cash conversion supports reserve funding, dividend/buyback capacity and capital allocation even if underwriting margins face headwinds.
Read all positive factors
Mercury General (MCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.33B
Dividend Yield1.34%
Average Volume (3M)224.03K
Price to Earnings (P/E)9.6
Beta (1Y)0.82
Revenue Growth9.44%
EPS Growth15.60%
CountryUS
Employees4,200
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)9.77
Shares Outstanding55,388,626
10 Day Avg. Volume207,908
30 Day Avg. Volume224,032
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 Cap0.86
Enterprise Value/Revenue0.76
Enterprise Value/Gross Profit2.25
Enterprise Value/Ebitda5.94
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)9
Revenue Forecast (FY)$6.06B
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. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella...
How the Company Makes Money
Mercury General makes money primarily through (1) insurance underwriting and (2) investment income on its investment portfolio. Underwriting revenue is generated by collecting premiums from policyholders across its insurance products, then paying ...
Mercury General Key Performance Indicators (KPIs)
Mercury General Earnings Call Summary
Earnings Call Date:Feb 11, 2025
(Q4-2024)
| % Change Since: |
Next Earnings Date:May 05, 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
72
Positive
Balance Sheet
78
Positive
Cash Flow
86
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.99B | 5.48B | 4.63B | 3.64B | 3.99B |
| Gross Profit | 2.03B | 932.86M | 403.25M | -373.76M | 599.82M |
| EBITDA | 767.26M | 679.14M | 195.84M | -571.09M | 395.48M |
| Net Income | 541.09M | 467.95M | 96.34M | -512.67M | 247.94M |
Balance Sheet | |||||
| Total Assets | 9.56B | 8.31B | 7.10B | 6.51B | 6.77B |
| Cash, Cash Equivalents and Short-Term Investments | 1.32B | 1.00B | 729.39M | 412.71M | 475.68M |
| Total Debt | 594.35M | 587.71M | 587.96M | 420.25M | 407.51M |
| Total Liabilities | 7.14B | 6.36B | 5.56B | 4.99B | 4.63B |
| Stockholders Equity | 2.42B | 1.95B | 1.55B | 1.52B | 2.14B |
Cash Flow | |||||
| Free Cash Flow | 1.03B | 990.98M | 416.18M | 317.08M | 460.14M |
| Operating Cash Flow | 1.09B | 1.04B | 452.99M | 352.59M | 501.58M |
| Investing Cash Flow | -420.16M | -796.66M | -295.44M | -316.38M | -373.67M |
| Financing Cash Flow | -71.72M | -71.11M | 103.58M | -81.99M | -140.84M |
Mercury General Technical Analysis
Positive
93.12
Price Trends
90.15
Positive
90.33
Positive
83.36
Positive
Market Momentum
1.57
Negative
66.79
Neutral
91.26
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCY, the sentiment is Positive. The current price of 93.12 is above the 20-day moving average (MA) of 90.34, above the 50-day MA of 90.15, and above the 200-day MA of 83.36, indicating a bullish trend. The MACD of 1.57 indicates Negative momentum. The RSI at 66.79 is Neutral, neither overbought nor oversold. The STOCH value of 91.26 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 1 New Risks
1.
There is uncertainty involved in the collectability of subrogation recoverable. Q4, 2025
Mercury General Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $4.91B | 11.67 | 12.93% | 1.85% | 8.76% | 99.32% | |
79 Outperform | $5.36B | 1.59 | 22.87% | 0.05% | 29.96% | 377.33% | |
78 Outperform | $1.98B | 5.59 | 38.04% | 0.82% | 20.07% | 129.35% | |
74 Outperform | $5.33B | 9.63 | 25.65% | 1.34% | 9.44% | 15.60% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $4.73B | 23.95 | 13.40% | 4.05% | 9.01% | 40.14% | |
56 Neutral | $2.01B | -74.49 | 5.08% | 3.15% | 3.36% | -55.22% |
* Financial Sector Average
MCY
Mercury General
95.49
37.85
65.66%
RLI
RLI
50.73
-20.63
-28.91%
SIGI
Selective Insurance Group
80.88
-6.16
-7.07%
KMPR
Kemper
33.55
-25.84
-43.51%
WTM
White Mountains Insurance Group
2,167.41
382.25
21.41%
HCI
HCI Group
149.25
2.00
1.36%
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.