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:
We started the process of determining a valid price forecast for Mercury General Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Mercury General Corp ranked in the 75th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 237.5% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for MCY, they are:
MCY's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 28.25% 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 17.42. This coverage rate is greater than that of 84.26% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Financial Services), Mercury General Corp has a reliance on debt greater than only 24.48% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
OXSQ, ESNT, RE, FAF, and ATAX 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.
Mercury General Corporation (NYSE: MCY) reported today that after the markets close on Tuesday, February 16, 2021, the Company will issue an earnings press release reporting its results for the fourth quarter of 2020, and will also file its annual report on Form 10-K with the Securities and Exchange Commission. The earnings press release should be read in conjunction with the Company's annual report on Form 10-K.
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