Mercury General Corporation MCY hit a 52-week high of $89.92 on Nov. 18. Shares closed at $89.06 after gaining 20.8% in the past year, outperforming the industry, the sector, and the Zacks S&P 500 composite.
Mercury General has outperformed its peers, including Axis Capital Holdings Limited AXS, The Travelers Companies, Inc. TRV, and Cincinnati Financial Corporation CINF. Shares of AXS, TRV, and CINF have gained 16.6%, 11.5% and 7.1%, respectively, in the past year.
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With a capitalization of $4.93 billion, the average number of shares traded in the last three months was 0.2 million.
MCY Trading Above 50-Day and 200-Day Moving Averages
Shares of Mercury General are trading above the 50-day and 200-day simple moving averages (SMA) of $81.42 and $66.81, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
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MCY’s Growth Projection Encourages
The Zacks Consensus Estimate for 2025 revenues is pegged at $5.83 billion, implying a year-over-year improvement of 8.3%. The estimate for 2026 earnings per share and revenues indicates an increase of 23.5% and 6.7%, respectively, from the corresponding 2025 estimates.
The insurer has a solid surprise history. It surpassed earnings estimates in each of the last four quarters, the average beat being 152.2%. MCY has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
Optimistic Analyst Sentiment on MCY
One analyst covering the stock has raised estimates for 2025 and one analyst for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 moved 51.1% and 13.5% north, respectively, in the last 30 days.
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MCY’s Favorable Return on Capital
Return on equity for the trailing 12 months was 19.5%, which compared favorably with the industry’s 8%. This reflects its efficiency in utilizing shareholders’ funds.
Return on invested capital in the trailing 12 months was 11.8%, better than the industry average of 6.1%, reflecting MCY’s efficiency in utilizing funds to generate income.
Average Target Price for MCY Suggests Upside
Based on short-term price targets offered by one analyst, the Zacks average price target is $100 per share. The average suggests a potential 13% upside from the last closing price.
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What's Aiding MCY's Performance?
Mercury General has been gaining ground by relying on a set of core organic strengths. Premiums have trended steadily higher, supported by rate increases across insurance lines and a growing base of policies. The Property and Casualty segment has also held up well, signaling a stable backdrop for the company’s operations. These organic drivers are lifting Mercury General’s top line and shaping the path for continued expansion.
Over the past five years, the top line grew at a compound annual growth rate of 7.6%, supported by higher net premiums earned and other revenues. California remains a key driver, with higher rates in the homeowner’s line and a growing number of auto policies strengthening the company’s premium base.
Net investment income has also played a key role in Mercury General’s growth. Over the past five years, it grew at a compound annual rate of 15.7%, supported by higher average yields and a larger base of invested assets. With floating-rate investments, the company anticipates that investment income in 2025 will remain close to the 2024 levels, continuing to provide a reliable contribution to overall revenues.
Mercury General’s strong liquidity position further supports its growth. With combined cash and short-term investments of $1.7 billion as of Sept. 30, 2025, the company has sufficient resources to meet its operational needs. Historical cash generation has also been solid, with average annual net cash from operations over the past decade providing ample coverage for liquidity requirements.
End Notes
Solid performance across its Property and Casualty segment, rate increases, rise in the number of policies written, higher average invested assets and cash, as well as financial flexibility, make Mercury General a strong contender for being in one’s portfolio.
Mercury General also has a VGM Score of A. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers.
Coupled with favorable estimates, solid growth projections, and higher return on capital, the time appears right for potential investors to bet on this Zacks Rank #1 (Strong Buy) insurer. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Mercury General Corporation (MCY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
