2 models fit Mercury General Corporation Common Stock and they disagree: 0 of 2 land within 15% of the average. The price is below every model.
Two or more of our models back this value.
Large discount(i)Gold82
Valued as an insurer: Residual income, P/E comparison, and Dividend discount.
ACCE opinionMercury General Corporation Common Stock (MCY)
Fair value (2 models)
$197
ACCE price target
$118
Rating
Undervalued
Horizon
12 months
Fair value published on 20 Oct 2026, 15:04 CEST; previously $195 since 16 Oct 2026, 00:00 CEST.
ACCE price target published on 10 Oct 2026, 00:00 CEST.
Rating published on 20 Oct 2026, 15:04 CEST.
Price used: $103 at the close on 23 Oct 2026, 22:00 CEST.
Models: P/E comparison and Residual income.
Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
Produced by ACCE Investments (acceinvestments.com)
Data
Price vs fair value
47.9% below
+92.0% to fair value
ACCE score
78
out of 100
Analysts
100% buy
1 covering
P/E
6.1x
forward 8.4x
1-year return
+30.3%
Dividend yield
1.19%
Mercury General Corporation Common Stock in four questions
Plain answers, details below
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Overview
ACCE thesis
Mercury General writes personal auto and homeowners insurance, mostly through its own agency network and a growing direct channel, with California as its dominant exposure. The advantage is an established auto book and a low-cost claims operation that has produced a 39.0% return on equity, which is high for a property and casualty insurer. Revenue growth of 13.8% reflects firmer auto pricing and policy count gains as carriers pull back and competitors raise rates. The stock trades at 6.0 times trailing earnings but 19.8 times forward, a gap that tells you the market expects earnings to normalize from a benign loss year, so the debate is about how much of current profitability is durable. At a $5.6 billion market cap with a 19.9% operating margin and no index membership, it is a mid-cap name the market may be mispricing in either direction, and it merits a deeper look at loss ratios and California rate adequacy.
⚠ Investor warnings · 3 flagsAI-assisted·How I use AI
moderate
Score down sharply
ACCE score fell from 85 to 76 over 90 days, with the Momentum sub-score at 70 and Growth at 76, so the rating has weakened even as earnings rose 58.3% YoY.
moderate
Earnings growth may not repeat
Earnings grew 58.3% YoY on a P/E of 6.1 against a forward P/E of 19.8, which implies the trailing profit may be unusually high and not a steady run rate.
moderate
Insurer exposed to cyclical losses
Net margin of 14.8% and ROE of 39.0% are strong for a property and casualty insurer, but these lines are prone to catastrophe and pricing-cycle swings that can compress them quickly.
AI research notes
AI-assisted·How I use AIWritten Oct 19, 2026 · figures from 2026-10-16 · prices to Oct 23, 2026
Why it could do well
Trailing free cash flow reached $1.0B, and the forward P/E of 19.8x sits above the sector median of 11.8x only because earnings are expected to fall.
Net margin of 14.8% and revenue growth of 13.8% year over year show the business is currently growing and profitable.
The company trades at 47.9% below the model fair value of $197.44, and the 1.3% dividend yield adds a small cash return.
Why it could disappoint
The forward P/E of 19.8x against a trailing 6.1x signals the market expects peak earnings to fade.
Only one analyst covers the stock, so the 100% Buy rating and the $120.00 analyst target rest on a single view.
Each chip shows the exact figure and where it comes from. A claim without a source is not published.
Next results
Nov 3, 2026
We update the fair value about 2 days after the results, once the new figures are filed.Add to calendarGoogle
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Valuation
INVESTOR
Where MCY's valuation models land
Price
$102.85
Model fair value
$197
Model range
$160 to $242
Fair value $197
Price $103
The price is below the whole model range.
Model
Fair value
Upside
Dividend discount
P/E comparison
Residual income
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Quality
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