Mercury General Corporation research snapshot
MCY AI stock analysis as of the August 3, 2026 data cutoff reads Mercury General as a well-run California-focused P&C insurer trading at a single-digit P/E with a cheap free-cash-flow yield, but with earnings expected to normalize lower in 2026. The stock traded at $107.88 on August 3, 2026, up 0.71% from the $107.12 close on July 31, carrying a market capitalization near $5.93 billion, computed as $107.12 times 55.39 million shares outstanding and reported at $5.98 billion by StockAnalysis.com. TTM revenue was about $6.14 billion with TTM net income near $840 million, a trailing P/E of 7.06, a forward P/E of 9.16, and a free-cash-flow yield near 24%. The stock is consolidating below its 52-week high of $113.06 after a roughly 52% one-year gain, still above the 50-day moving average near $104.46 and the 200-day near $93.67, with 14-day RSI near 51.7. The central question is whether the California rate-cycle improvements and underwriting discipline can support earnings as the company reports Q2 2026 results on August 4, 2026, against a consensus current-quarter estimate near $1.80 per share, down from $2.67 a year earlier. This is informational research and not investment advice.
Current price
$107.88 at the August 3, 2026 market open reading, up 0.71% from the $107.12 July 31 close
Market cap
$5.93 billion
AI score
72 / 100
Rating
Undervalued insurer with California concentration risk
Trend status
Consolidating below the 52-week high near $113.06, above the 50-day and 200-day moving averages, up about 52% over one year
Data cutoff (updated monthly)
August 4, 2026
Informational use only. This page is not investment advice.
| Dimension | Conclusion | Confidence |
|---|---|---|
| Business quality | Mercury General writes personal auto and homeowners insurance through independent agents, primarily in California. The business is cyclical and tied to underwriting margins and investment income, with TTM revenue near $6.14 billion and a TTM profit margin near 13.7%. | Medium-high |
| Moat | The moat comes from an established California independent agent network, local brand recognition, and decades of underwriting data. However, national competitors like Progressive, GEICO, and State Farm have more scale and technology. | Medium |
| Management | CEO Gabriel Tirador has led the company since 2014, overseeing a shift to more restrictive underwriting and rate adequacy. Management has a solid record of capital allocation, with a small dividend and a disciplined share count. | Medium-high |
| Financial trend | TTM net income was about $840 million on TTM revenue near $6.14 billion. Reported ROE is near 38% on the StockAnalysis.com statistics page, but the forward P/E of 9.16 versus 7.06 trailing implies earnings are expected to normalize lower through 2026. | Medium-high |
| Valuation | At 7.06x trailing earnings, 2.29x book value, and about 4.2x trailing free cash flow, the stock is cheap on current earnings. The question is whether earnings are near a cyclical peak and how much California concentration risk is priced in. | Medium |
| Technical trend | MCY traded at $107.88 on August 3, 2026, up 0.71% from the $107.12 July 31 close, consolidating below the 52-week high of $113.06 and above the 50-day moving average near $104.46 and the 200-day near $93.67, with 14-day RSI near 51.7 after cooling from overbought levels. | Medium-high |
| Risk level | Key risks are the California regulatory environment, wildfire catastrophe losses, rising repair costs, competition from larger national carriers, and auto accident frequency trends. | Medium-high |
| AI confidence | High for the financial map, market data, and major risk categories that cross-validated during the refresh. Lower for predicting California regulatory outcomes, wildfire severity, or the timing of the P&C cycle turn. | Medium-high data confidence |
| Investment certainty | Medium-low. The cheap trailing valuation is real, but the forward P/E of 9.16 and the expected Q2 earnings decline mean the outcome depends on factors outside the historical financial statements. | Medium-low |
MCY AI stock forecast
The MCY AI stock forecast uses scenario ranges around the $107.12 July 31 close and the roughly $11.70 normalized earnings level implied by the 9.16 forward P/E. A three-scenario model using a 12% growth case with a 12x exit multiple, a 6% base case with a 9x exit multiple, and a -8% bear case with a 6x exit multiple over three years produced reference points near $197, $125, and $59 before dividends. These are scenarios, not price commitments.
$165 to $200
More likely if Mercury keeps a sub-90 combined ratio, rate increases keep earning through, catastrophe losses stay below historical averages, buybacks reduce the share count, and earnings do not normalize as sharply as the current forward estimates imply.
$110 to $135
More likely if earnings normalize toward the roughly $11.70 level implied by the 9.16 forward P/E, competition in California increases, and the stock trades near 8x to 10x normalized earnings.
$55 to $80
More likely if a major California wildfire or earthquake causes significant losses, regulatory changes pressure pricing, the California auto market sees adverse loss-cost trends, or earnings fall further than the current Q2 estimate of about $1.80 per share implies.
MCY AI technical analysis
MCY AI technical analysis as of the August 3, 2026 data cutoff shows the stock consolidating below its 52-week high after a strong one-year run. The stock traded at $107.88, up 0.71% from the $107.12 July 31 close, above the 50-day moving average near $104.46 and the 200-day near $93.67, with 14-day RSI near 51.7 after cooling from overbought levels. Because this page does not fetch request-time market data, traders should confirm levels on a live chart before acting.
| Level | Value | Why it matters |
|---|---|---|
| Current price | $107.88 | StockAnalysis.com real-time quote at the August 3, 2026 market open; the last verified close was $107.12 on July 31, 2026. |
| Near support | $103.50 to $105.80 | Barchart reported the first support level near $105.81 and the third near $103.54 on August 3, 2026, sitting just below the 50-day moving average area. |
| Secondary support | $96 to $98 | The 61.8% Fibonacci retracement is near $96.22 and the 50% retracement near $91.02 on Barchart. A break below the $103.50 area would open this zone. |
| Near resistance | $108 to $110.40 | Barchart placed the first resistance near $108.08 and the third near $110.35 on August 3, 2026, ahead of the 52-week high. |
| 50-day moving average | $104.46 | StockAnalysis.com reported the 50-day moving average near $104.46 on August 3, 2026, below the current price. |
| 200-day moving average | $93.67 | StockAnalysis.com reported the 200-day moving average near $93.67 on August 3, 2026, well below price and supporting the longer-term uptrend. |
| Momentum | RSI near 51.7 | 14-day RSI was near 51.69 on StockAnalysis.com on August 3, 2026, neutral after cooling from overbought levels following the July 7 peak. |
| Volume | About 272,000 average shares | StockAnalysis.com listed 20-day average volume near 271,855 shares and Barchart listed average options volume near 123 contracts on August 3, 2026. |
| Volatility | IV 41.43%, HV 25.61% | Barchart reported options implied volatility near 41.43% with historical volatility near 25.61% on August 3, 2026, so expected range and position sizing matter around the August 4 earnings report. |
| Invalidation | Close below $103.50, then $96 | A close below the $103.50 support area would weaken the near-term setup; a move below the $96 to $98 zone would challenge the longer-term trend toward the 200-day area. |
MCY AI trading strategy
The MCY AI trading strategy is a rules-based framework, not personalized advice. It combines the valuation floor, technical confirmation, position sizing, and clear invalidation levels that reflect California-concentration risk and the upcoming August 4, 2026 Q2 earnings report.
Look for MCY to hold the $103.50 to $105.80 support area while the trailing P/E stays below 8x and the combined ratio remains below 95. Use the August 4, 2026 Q2 earnings report and quarterly filings as catalysts.
If the stock closes below $96, the trend thesis weakens. If the combined ratio exceeds 100 for a quarter or earnings miss the roughly $1.80 consensus estimate sharply, the underwriting thesis is challenged.
A decisive move above the $110.40 resistance zone on above-average volume would signal renewed momentum toward the 52-week high of $113.06. Confirm with improving California pricing and contained loss-cost trends.
A failed breakout near $110 to $113 or a daily close back below $105.80 should reduce confidence. Do not chase above the 52-week high without volume confirmation.
Track Q2 2026 earnings on August 4, 2026, California regulatory developments, the California wildfire season, premium growth trends, and buyback execution.
Reduce position if California regulators block rate increases, a major catastrophe depletes reserves, or the dividend is cut.
Investment research summary
Mercury General sells personal auto and homeowners insurance to California and select Sunbelt customers through independent agents, making money when premiums and investment income exceed claims and expenses.
The moat is a long-established California independent agent network, local brand recognition, and more than 60 years of underwriting data. However, scale and technology advantages belong to Progressive, GEICO, and State Farm.
The thesis fails if California regulation prevents adequate pricing, wildfire or earthquake losses overwhelm reserves, national competitors use data advantages to undercut pricing, the hard market turns soft, or 2026 earnings normalize faster than the current estimates imply.
CEO Gabriel Tirador and the leadership team have focused on rate adequacy, underwriting discipline, and capital return. The key risk is that the California-first strategy limits diversification.
P&C insurance is cyclical. The recent hard market in California auto has benefited MCY significantly, while the long-term trend includes usage-based insurance, telematics, and increasing competition from tech-enabled carriers.
At 7.06x trailing earnings and about 4.2x trailing free cash flow, the valuation embeds skepticism about earnings sustainability, but the 9.16 forward P/E already anticipates a step down in earnings. A meaningful margin of safety exists only if normalized earnings stay closer to current levels.
Source-backed data
Every metric below includes a source and last verification date.
| Metric | Value | Source | Last verified |
|---|---|---|---|
| MCY price | $107.88 at the August 3, 2026 market open reading, up 0.71% from the $107.12 July 31 close | StockAnalysis.com real-time quote and price history | August 3, 2026 |
| Market capitalization | $5.93 billion, computed as $107.12 x 55.39 million shares outstanding, reported at $5.98 billion by StockAnalysis.com and $5.93 billion by Barchart | financial_rigor.py market cap verification, StockAnalysis.com statistics, and Barchart quote | August 3, 2026 |
| Shares outstanding | 55.39 million shares outstanding with a float near 26.55 million, about 52% owned by insiders and 47% by institutions | StockAnalysis.com statistics and Barchart quote | August 3, 2026 |
| TTM revenue | Approximately $6.14 billion over the trailing twelve months ended March 31, 2026, with FY2025 revenue of $5.99 billion up 9.44% | StockAnalysis.com financials | August 3, 2026 |
| TTM net income | Approximately $839.84 million on the StockAnalysis.com statistics page, with FY2025 net income of $541.09 million up 15.62% | StockAnalysis.com statistics and financials | August 3, 2026 |
| EPS (TTM) | $15.16 to $15.17 per share (StockAnalysis.com financials and statistics), with FY2025 EPS of $9.77 up 15.62% | StockAnalysis.com financials and statistics | August 3, 2026 |
| P/E ratio | 7.06x trailing on the StockAnalysis.com statistics page, 9.16x forward, and 7.07x verified as $107.12 / $15.16 by financial_rigor.py; Barchart reports 7.80x trailing | StockAnalysis.com statistics and financial_rigor.py valuation verification | August 3, 2026 |
| Price-to-book | 2.29x price-to-book and 2.34x price-to-tangible-book on StockAnalysis.com, verified as 2.29x by financial_rigor.py using book value per share of $46.76 | StockAnalysis.com statistics and financial_rigor.py | August 3, 2026 |
| Free cash flow | TTM free cash flow near $1.42 billion, with operating cash flow of $1.48 billion and capital expenditures of -$62.09 million, for a P/FCF of 4.18x and a FCF yield near 23.92% on StockAnalysis.com | StockAnalysis.com statistics and cash flow statement | August 3, 2026 |
| Return on equity | 38.08% on the StockAnalysis.com statistics page; financial_rigor.py computed 32.42% as $15.16 / $46.76 book value per share | StockAnalysis.com statistics and financial_rigor.py | August 3, 2026 |
| Cash and investments | Cash and equivalents of $1.351 billion and total investments of $6.825 billion as of March 31, 2026 on the StockAnalysis.com balance sheet page, with the statistics page reporting $1.79 billion cash under S&P Global classification | StockAnalysis.com balance sheet and statistics | August 3, 2026 |
| Debt and net cash | Total debt of $574.63 million as of March 31, 2026 on the balance sheet page, with the statistics page reporting $587.28 million total debt and $763.61 million net cash, or $13.79 per share | StockAnalysis.com balance sheet and statistics | August 3, 2026 |
| Book value | Book value of $2.59 billion, $46.76 per share, and tangible book value of $45.87 per share as of March 31, 2026 | StockAnalysis.com balance sheet | August 3, 2026 |
| Dividend | Annual dividend of $1.27 per share with a 1.19% forward yield, quarterly dividend of $0.317 per share paid most recently on June 11, 2026 | StockAnalysis.com dividend page and statistics | August 3, 2026 |
| Short interest | 1.45 million shares short, 2.61% of shares outstanding, 5.45% of float, about 4.29 days to cover | StockAnalysis.com statistics short selling | August 3, 2026 |
| Q2 2026 earnings date | The next confirmed earnings date is Tuesday, August 4, 2026, after market close, per StockAnalysis.com and the Mercury General press release issued July 7, 2026 | StockAnalysis.com statistics and Mercury General PRNewswire release | August 3, 2026 |
| Most recent quarter | Q1 2026 EPS of $3.50 reported May 5, 2026, with the Q1 2026 Form 10-Q filed for the quarter ended March 31, 2026 | Barchart earnings data and SEC EDGAR Q1 2026 Form 10-Q for CIK 0000064996 | August 3, 2026 |
| Analyst coverage | Barchart shows a Moderate Buy rating based on 3 analysts with a current-quarter EPS estimate near $1.80, down about 33% year over year from $2.67; StockAnalysis.com shows no published consensus target | Barchart analyst ratings and earnings estimates | August 3, 2026 |
| 52-week range and performance | 52-week range of $66.57 to $113.06 on StockAnalysis.com and $68.98 to $113.06 on Barchart, up about 52% over the trailing 52 weeks, beta near 0.91 | StockAnalysis.com quote and statistics | August 3, 2026 |
| Technical snapshot | 50-day moving average near $104.46, 200-day moving average near $93.67, 14-day RSI near 51.69, and 20-day average volume near 271,855 shares on StockAnalysis.com, with Barchart turning points near $105.81 support and $108.08 resistance and Fibonacci retracements near $96.22 (61.8%), $91.02 (50%), and $85.82 (38.2%) | StockAnalysis.com statistics and Barchart technical data | August 3, 2026 |
| Options volatility | Implied volatility near 41.43% with historical volatility near 25.61%, an IV percentile near 75%, and an expected move near 2.35% over 18 days, per Barchart on August 3, 2026 | Barchart options volatility overview | August 3, 2026 |
This MCY AI stock analysis is an informational research tool, not investment advice, a recommendation, or a promise of future return. Forecast ranges are scenarios based on available filings, quote snapshots, and third-party data as of the stated cutoff date. They may be wrong, incomplete, or outdated after new earnings, regulatory actions, catastrophe events, market moves, or macro conditions.
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