Mercury General Corporation writes personal automobile insurance, homeowners, commercial automobile, commercial property, mechanical breakdown, fire, and umbrella insurance. The company was founded in 1960 and is based in Los Angeles, California.
MCY Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for MCY, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Mercury General Corp ranked in the 73th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 333% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for MCY, they are:
The company's balance sheet shows it gets 84% of its capital from equity, and 16% of its capital from debt. Its equity weight surpasses that of 69.38% of free cash flow generating stocks in the Financial Services sector.
MCY's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 37.83% of tickers in our DCF set.
Mercury General Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 23.19. This coverage rate is greater than that of 86.37% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CACC, OCN, HNNA, PGR, and DGICA can be thought of as valuation peers to MCY, in the sense that they are in the Financial Services sector and have a similar price forecast based on DCF valuation.