Mercury General (MCY): Assessing Valuation After a Strong Multi‑Year Share Price Rebound

Mercury General (MCY) has quietly turned into a strong insurance rebound story, with the stock up about 36% year to date and roughly 18% over the past 3 months, catching value-focused investors attention.

See our latest analysis for Mercury General.

That 35.8% year to date share price return, alongside a 3 year total shareholder return of about 175.5%, suggests investors are steadily warming to Mercury General again as underwriting results and sentiment improve around property and auto insurers.

If Mercury’s rebound has you rethinking where the next opportunity might come from, this could be a good moment to explore fast growing stocks with high insider ownership.

With shares now hovering just below analysts price targets after a powerful multi year run, is Mercury still trading at a sensible discount, or are investors already paying up for all the future growth on offer?

Most Popular Narrative Narrative: 10.7% Undervalued

With Mercury General last closing at $89.27 against a most popular narrative fair value of $100, the story hinges on steady cash generation and modest growth assumptions.

The expected capital generation from core underlying earnings in 2025 is anticipated to help rebuild statutory surplus, potentially positively impacting net margins and financial stability.

Read the complete narrative.

Want to see what is powering that surplus rebuild story? The narrative leans heavily on disciplined underwriting, firm premium growth, and a valuation multiple that has quietly shifted higher. Curious how those moving pieces combine into that fair value gap?

Result: Fair Value of $100 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, wildfire related losses and potential reinsurance cost spikes could quickly pressure margins and surplus, which would challenge the idea that earnings stability is locked in.

Find out about the key risks to this Mercury General narrative.

Another Angle on Value

Our DCF model is less optimistic than the narrative fair value, pointing to a fair value of about $79.55 per share versus the current $89.27 price. That implies Mercury might already be priced ahead of its medium term cash flows. The question for investors is which story should carry more weight.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Mercury General for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 901 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Mercury General Narrative

If you see the numbers differently or want to dig into the fundamentals yourself, you can build a personalized narrative in just a few minutes: Do it your way.

A great starting point for your Mercury General research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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