Mercury General delivers exceptional earnings consistency — four straight quarters of large beats averaging approximately 73% above estimates — and screens deeply cheap at a forward multiple of 8.4x with free cash flow running nearly twice net income, but a hard geographic concentration block on California and only 1% upside to the analyst target make this a hold rather than a new entry at current prices.
Thesis pillars
- Deep Value At Low Multiple→Stable
- Consistent Earnings Outperformance↑Improving
- California Concentration Terminal Risk→Stable
- +1 more pillar — see the Why tab for full reasoning
Mercury General Corporation (MCY) Stock Analysis
Financial Services · Insurance - Property & Casualty
Wait for pullback to $102.33. Weak momentum — blocks BUY_NOW at $105.38. Engine's entry $102.33 (support + ATR (held)) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Single-region cliff: 85% exposure to California (≥60% threshold). Regional macroeconomic shock = idiosyncratic terminal risk.; Concentration risk — Geographic: California (85.0%).
Mercury General Corporation writes personal automobile, homeowners, commercial automobile, and other property-casualty insurance through 12 subsidiaries in 11 states, with California representing 82.1% of total direct premiums written in 2025. The company sells through... Read more
Wait for pullback to $102.33. Weak momentum — blocks BUY_NOW at $105.38. Engine's entry $102.33 (support + ATR (held)) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Single-region cliff: 85% exposure to California (≥60% threshold). Regional macroeconomic shock = idiosyncratic terminal risk.; Concentration risk — Geographic: California (85.0%). Chart setup: No clear chart pattern; technical signals are mixed. Fundamentals strong but target reached (-3.2% upside). Wait for pullback. Score 6.6/10, moderate confidence.
Passes 6/9 gates (clean insider activity, no SEC red flags, news events none recent, earnings proximity 80d clear, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum and favorable risk/reward ratio and finsvc regional cliff hard block. Suitability: speculative.
About Mercury General Corporation
About Mercury General Corporation
Mercury General Corporation wrote $5.98 billion in direct premiums in 2025, with private passenger automobile representing 60.0% of direct premiums written, homeowners 27.3%, and commercial automobile 6.5%. California accounted for 82.1% of total direct premiums written in 2025; the company operates in 11 states through 12 insurance subsidiaries, all rated A (Excellent) by A.M. Best, employing approximately 4,300 people at December 31, 2025.
Mercury General earns revenue through personal and commercial insurance policies sold primarily through about 8,510 independent agents that accounted for approximately 88% of direct premiums written in 2025; two owned agencies, AIS and PoliSeek, supplement this distribution. Net commissions were about 15% of net premiums written. The combined loss and expense ratio was 96.5% company-wide in 2025 (versus 96.1% in 2024), with private passenger automobile only at 89.5%. The investment portfolio totaled $6.24 billion at fair value at December 31, 2025, comprising $5.43 billion in fixed maturities (of which approximately 53% in tax-exempt municipal bonds) and $812 million in equity securities, supporting investment income alongside earned premiums.
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California's regulatory environment presents a structural constraint: the state's DOI requires prior rate approval and allows consumer groups to intervene in filings — and in January 2025, the Palisades and Eaton wildfires drove $508 million in net catastrophe losses (after $586 million in recorded subrogation). A.M. Best revised the outlook for the California Companies from Stable to Negative in February 2025, citing adverse claims experience. The 10-K notes that if the company cannot obtain timely rate approvals in California, its ability to operate profitably may be limited.
See also: Financial Services · Insurance - Property & Casualty
From Mercury General Corporation's most recent 10-K filing, extracted June 11, 2026.
Recent developments
updated 2026-08-15Recent Developments — Mercury General Corporation
Latest news
- NEWS Mercury General Corp (MCY) Valuation: PE, PB & Fair Value Analysis - TradingKey — TradingKey neutral
- NEWS Mercury General Corp (MCY) Institutional Confidence - TradingKey — TradingKey neutral
- NEWS Mercury General Corp (MCY) Valuation: PE, PB & Fair Value Analysis - tradingkey.com — tradingkey.com neutral
- NEWS Mercury General (NYSE:MCY) Downgraded to Hold Rating by Zacks Research - MarketBeat — MarketBeat negative
- NEWS DOWLING & PARTN Forecasts Mercury General FY2027 Earnings - MarketBeat — MarketBeat positive
Generated 2026-08-15T13:12:18Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- HIGHGeographicCalifornia85%10-K Item 1A: 'the Company generated approximately 85% of its direct automobile insurance premiums written in California'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Rating Breakdown
1 floor-breaker·1 ceiling hit
Momentum below the gate floor. Component breakdown shows what dragged the score down.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Wait for pullback to $102.33. Weak momentum — blocks BUY_NOW at $105.38. Engine's entry $102.33 (support + ATR (held)) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Single-region cliff: 85% exposure to California (≥60% threshold). Regional macroeconomic shock = idiosyncratic terminal risk.; Concentration risk — Geographic: California (85.0%). Chart setup: No clear chart pattern; technical signals are mixed. Fundamentals strong but target reached (-3.2% upside). Wait for pullback. Target $109.76 (+4.2%), stop $96.83 (−8.8%), A.R:R -0.6:1. Score 6.6/10, moderate confidence.
Take-profit target: $109.76 (-3.2% upside). Target $109.76 (+4.2%), stop $96.83 (−8.8%), A.R:R -0.6:1. Stop-loss: $96.83.
Single-region cliff: 85% exposure to California (≥60% threshold). Regional macroeconomic shock = idiosyncratic terminal risk.; Concentration risk — Geographic: California (85.0%); Analyst target reached - limited upside remaining.
Mercury General Corporation trades at a P/E of 6.2 (forward 8.8). TrendMatrix value score: 9.7/10. Verdict: Buy (Wait for Entry).
6 analysts cover MCY with a consensus score of 4.0/5. Average price target: $120.
What does Mercury General Corporation do?Mercury General Corporation writes personal automobile, homeowners, commercial automobile, and other property-casualty...
Mercury General Corporation writes personal automobile, homeowners, commercial automobile, and other property-casualty insurance through 12 subsidiaries in 11 states, with California representing 82.1% of total direct premiums written in 2025. The company sells through approximately 8,510 independent agents and two owned agencies (AIS and PoliSeek); direct premiums written totaled $5.98 billion in 2025.