Mercury General(US:MCY) ZACKSยท2025-08-20 15:41Core Insights - Mercury General Corporation (MCY) has outperformed its industry and major indices, with a share price increase of 20.4% over the past year compared to 6.8% for the Zacks S&P 500 composite [1] - The company has a market capitalization of $4.07 billion and an average trading volume of 0.3 million shares over the last three months [2] - MCY's shares are trading above both the 50-day and 200-day simple moving averages, indicating strong upward momentum [3] Financial Performance - MCY's top line has experienced a 7.6% compound annual growth rate (CAGR) from 2020 to 2024, driven by higher net premiums earned and other revenues [6] - Net investment income has surged with a CAGR of 15.7% over the past five years [6] - The Zacks Consensus Estimate for 2025 revenues is $5.81 million, reflecting a year-over-year improvement of 7.8% [7] Earnings and Growth Potential - MCY has consistently surpassed earnings estimates, with an average beat of 166% over the last four quarters [8] - The company has a Growth Score of A, indicating strong growth prospects [8] - The average price target for MCY is $90 per share, suggesting a potential upside of 23% from the last closing price [10] Return on Capital - Return on equity (ROE) for the trailing 12 months is 16.6%, significantly higher than the industry average of 7.6% [9] - Return on invested capital stands at 9.6%, compared to the industry average of 5.9%, reflecting efficient fund utilization [9] Market Position and Strategy - MCY is benefiting from rate increases in California's automobile and homeowners insurance sectors, contributing to the growth in net premiums written [11] - The company has maintained positive cash flow from operations since its public offering in 1985, ensuring adequate liquidity without forced asset sales [13][14] - The combination of solid performance, favorable estimates, and higher return on capital positions MCY as a strong investment opportunity [15][16]